Airbus’s chief executive Gustav Humbert and chief salesman John Leahy spent much of last week explaining to some very angry A380 customers how the world’s number one civil aircraft manufacturer had managed to lose control of its flagship aircraft programme for the second time in less than a year. Shareholders EADS and BAE Systems are also seeking answers as to how Airbus management let such a humiliating and costly blunder occur. And some high profile jobs could be on the line if Airbus and its shareholders are to restore their credibility with customers and investors.
With the exception of the first aircraft to Singapore Airlines, the latest rescheduling means that first deliveries to early customers will be around a year later than the date agreed when they placed their orders, as a six-month slip was already announced in June last year.
But apart from spouting woolly jargon like “industrial ramp-up issues” and “production bottlenecks”, Airbus is yet to provide a satisfactory explanation to its customers or the industry in general about how it let the programme get so out of shape. And assurances that six-month slips will not be an annual ritual may now lack a little credibility.
By definition, all A380 customers are blue chip clients, who bring the promise of billions of dollars of business. And clearly they can’t wait to get to get their hands on the new giant. So a worse public relations disaster for Airbus than last week’s announcement cannot be imagined.The manufacturer has spent 10 years gearing up for the introduction of the A380, knowing that such a headline-grabbing programme meant it had no where to hide if things went awry.
Determined not to repeat the less than glorious introduction suffered by the A340-500/600, Airbus created a major test programme to ensure the A380 would be “mature” at service-entry. With bench-testing of major systems as well as “aircraft zero” and “cabin zero” full-scale test rigs and the much-trumpeted “virtual first flight” trials – Airbus was sure it could eliminate the majority of the bugs before any fare-paying passengers stepped aboard. But the one system apparently overlooked amongst all this testing was the production process itself, which Airbus blamed for both delays.
Leahy says it was the “low-tech stuff” that got them – the wiring harnesses – but this will hardly reassure the customers. More worrying is how Airbus management was apparently unable to hear the timebomb ticking in the A380’s Jean-Luc Lagardère assembly plant a few kilometres from its Toulouse headquarters. Especially given that the join-up of sub-assemblies for new aircraft had been on hold for two months and working parties were furiously trying to rectify problems on completed aircraft.
So does Airbus have endemic organisational issues that hang over from its fragmented predecessor, the “Airbus Industrie” consortium? The move six years ago from the French GIE structure, which had served it since creation, into a single, integrated company came as part of the ground-work for the launch of A380 production. “The old GIE structure hampered reactivity and soundness of major business decisions,” said Airbus’s then financial controller Ian Massey at the time of the transition. The evidence from last week suggests that six years on, the old way of doing things may still be having a major influence on decision making.
But up until the A380 delay announcement last year it had been looking good for Airbus since its transition. The European airframer was whipping Boeing in both orders and output each year, as its rival flailed around trying to decide on its long-term product development strategy and went through several humiliating management shake-ups. But was Airbus really doing as good a job as it seemed, or was Boeing’s slump in performance allowing its European rival to paper over the cracks?
Having regrouped, predictably the Boeing rebound has been aggressive with it setting the agenda in the mid-market category with its 787. Meanwhile Airbus has made a meal out of its efforts to respond, and continues to lack a clear vision on what the market wants it to do. And after last Tuesday’s A380 announcement the news did not get any better, with SIA’s signing of a key deal for 787s adding to Airbus’s woes as it continues its internal debate on what the A350 should look like.
Leahy says that he expects the “confusion around the A350 to be cleared up by next month’s Farnborough air show”. By then there must also be clarity on who, and what, is to blame for the A380 debacle.