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AIRBUS 50: The extraordinary evolution of the commercial business

Over five decades Airbus has transformed itself from niche player into a global aerospace powerhouse. We chart its rise in the airliner manufacturing business

Decisions taken by an embryonic consortium of European aircraft manufacturers 50 years ago would have a far greater impact on the future of the global industry than even those visionaries could have imagined in their wildest dreams.

On 29 May 1969 at the Paris air show in Le Bourget, the French and German governments signed an agreement to go ahead with the “Airbus” project, with each partner taking a 50% shareholding. The first aircraft they would build – dubbed “A300B” – not only put the European manufacturing consortium on the map but also reshaped the design landscape for widebodies. And its outline specification – a fuselage diameter of 18ft 6in (5.6m) continues in today’s A330neo family.

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Airbus finally took the skies when the A300B flew in October 1972

Airbus

The origins of that May 1969 agreement can be traced to a meeting in early 1965 at Sud Aviation’s Paris offices at 37 Boulevard de Montmorency. Attended by a handful of representatives from the French, German and UK aerospace industries, it was here that “air bus” – a phrase used as a catch-all for the new generation of high-capacity jets – was adopted as the name for the European airliner project.

Arthur Howes, who was a young engineer at the Hawker Siddeley future projects department, was one of two UK representatives at that meeting and took the minutes as secretary. “I remember that the first minutes stated the term ‘air bus’ was not to imply any manner or form any deterioration in the standard of comfort or service,” he told Arthur Reed for his 1991 book: Airbus: Europe’s High Flyer.

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Howes added: “We were all concerned about the term ‘air bus’, which tended at the time to be used for any widebody airliner. The word stuck to us; it was something that was recognisable in all three languages.”

Another individual involved from the early days – who went on to become Airbus president – was Sud engineer Roger Beteille. He was appointed the project’s original technical director in 1967.

“There was no European manufacturer that had ongoing designs or manufacture of an aircraft that could effectively compete worldwide with the American products,” Beteille recalled to Flight International back in 1997. “The launch of an entirely new family of widebodies by Boeing, McDonnell Douglas and Lockheed could be seen as ringing the death knell of any hope of European recovery in this field.”

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“A300B” mock-up played host to historic Airbus signing at Le Bourget in May 1969

Airbus

INITIAL THOUGHTS

At the end of 1965, an Anglo-French ministry working party published its report on the “air bus prospects”, dubbed Outline Specification for the High-Capacity Short Haul Aircraft. It identified the requirement for a 200- to 225-seater with a range of 800nm (1,500km).

With the German industry (Dornier, MBB and VFW) also involved in “air bus” studies, the three European nations came together formally in 1966. Rolls-Royce (R-R) was on board as the engine partner, but hedged its bets by also securing an exclusive role on the Lockheed L-1011 TriStar trijet.

The Airbus project received its formal go-head on 26 September 1967, when an inter-governmental memorandum of ­understanding was signed by France, Germany and the UK. Plans had crystallised around a 300-seat twin, rather ­unimaginatively dubbed “A-300”.

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This original Airbus assembly-process diagram was published by Flight International in 1972

The aim was to secure launch orders from the partners’ national carriers, but none were forthcoming amid concerns about the big-twin’s proposed size. So, by late 1968 the aircraft had been scaled back to 250 seats – and briefly dubbed “A-250” - before the “A-300B” moniker was adopted (later simply “A300B”).

The original A-300 had been specified with R-R’s stillborn 47,500lb-thrust (211kN) RB207 engine, but the size shuffle reduced the thrust requirements, meaning it could be powered by any of the “big three” turbofans in development: the TriStar’s RB211 and crucially the 747’s Pratt & Whitney (P&W) JT9D-15, as well as the DC-10’s General Electric (GE) CF6-50.

By April 1969, the UK’s increasingly lukewarm support for the Airbus project had come to a head, and it withdrew from the partnership as R-R focused on the TriStar for its RB211. Significantly, part of the UK’s rationale for abandoning Airbus – and throwing its weight behind R-R and the TriStar – was the belief that the European twin’s market opportunity was unlikely to top 100 orders.

Two months after the UK decision, the French and Germans signed their historic 50:50 joint venture in a mock-up of the A300B at Le Bourget. Despite the UK government decision, Hawker Siddeley kept the faith, signing an agreement to design, develop and manufacture the A300B’s wing as a private venture and retained participation in board meetings – a link that would keep the door open for the UK to later re-enter Airbus as a full partner.

During 1969, the Netherlands (Fokker-VFW) joined up and the consortium was formally created as “Airbus Industrie” on 18 December 1970 under French law as a French partnership, or groupement d’interet economique (GIE). At the helm was Henri Ziegler – who was chairman of the newly formed consolidated French aerospace entity, Aerospatiale.

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France’s national carrier was Airbus’s first customer, introducing the A300B2 in 1974

Airbus

GAINING TRACTION

Airbus finally got its breakthrough in September 1970, when Air France emerged as the first serious customer for the A300, with a letter of intent for six firm orders and 10 options. The deal was firmed up in November 1971.

During the next decade Airbus evolved into the format in which it would enter the 21st century – when it would restructure into a merged business. Spain’s CASA joined in October 1971 with a 4.2 % stake (prompting the two existing partners to reduce theirs to 47.9% each). Hawker Siddeley and British Aircraft Corporation merged in 1977 to form British Aerospace, and the UK reversed its earlier decision, becoming a paid-up member in 1979 with a 20% shareholding. This saw the French and German shareholdings drop to 37.9% each.

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Development of the single-aisle A320 marked a coming of age for Airbus

Airbus

With the withdrawal of the UK – and therefore R-R – from the programme, the world’s first “big-twin” would be powered (initially at least) by GE’s CF6-50A turbofan. Construction of the prototype, designated “A300B1”, had begun in September 1969 at the Sud/Aerospatiale Saint Martin plant – alongside the Concorde facility – at Toulouse-Blagnac airport.

The decision by Airbus to take the then unprecedented step of configuring a widebody with two engines, rather than follow the lead of the US trijets, reflected Beteille’s conviction that a twin was essential to achieve the required operating economics.

The then American Airlines president, Frank Kolk, also played a part, recalled Beteille in 1997: “He was a real expert in the selection of aircraft. Kolk and his team had written a detailed specification for the 200- to 300-seat requirement and their ‘ideal’ aircraft was a twin. Much of it formed the basis for the A300 design.”

The A300B1 took to the air on 28 October 1972. The first production version, the A300B2, began earning money with launch customer Air France in May 1974.

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Market demand for long-range quad spurred A340 development, with A330 twin following closely behind

Airbus

Success for Airbus at first was slow, but within a decade of its creation, the orderbook and customer base were beginning to impress even the most persistent doubters. It had expanded its widebody family with a smaller A300 derivative – the A310 – that arrived in 1983, by which time there were grand plans for an extensive portfolio of larger and longer-range widebodies, as well as a family of single-aisles.

The latter was seen as crucial to really establishing Airbus as a genuine force in airliner manufacturing. But Airbus knew it could not just produce a “me-too” narrowbody twinjet to rival the Boeing 737 and McDonnell Douglas DC-9.

Beteille described the decision to make the A320 the first (subsonic) airliner with a fly-by-wire flight-control system as “one of the most difficult I ever made. Perhaps we were too bold – we had no choice. Either we were going to be first with new technologies or we could not expect to be in the market.

“The risk was not too high – after all, we had developed an analogue system for the Concorde and we had worked on several military programmes.”

Another key decision was around the width of the fuselage. Beteille said the choice was simple: “Either we had to use the Boeing section from the 707 and 727 [and later the 737] or do something better.”

Airbus of course went for greater width – 3.7m internal diameter against Boeing’s 3.45m – which “cost us a couple of hundred kilograms”, he said.

The A320’s service debut in May 1988 represented the coming of age for Airbus. Toulouse now had a portfolio of single- and twin-aisle products that finally placed it on a level playing field with its key US rivals, Boeing and McDonnell Douglas.

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Widebody family expanded in 1983 with the smaller A310 derivative of the A300

Airbus

Offered with a choice of CFM International CFM56 or IAE V2500 engines, the A320 went from strength to strength as Airbus delivered on its long-held plans for a family of narrowbodies spanning the 110- to 230-seat range. The larger A321 arrived in 1994 – and spurred the creation of a second assembly line in Hamburg, while the A319 “shrink” joined the range two years later. This variant provided the springboard into executive-travel sector in 1999 as the “Airbus Corporate Jetliner” edition.

A fourth single-aisle derivative, the A318 “double-shrink”, misfired in a poor attempt by Airbus to plug the bottom of its product line following the collapse of the AE31X regional jet family project with China. The 107-seater’s arrival was hampered by development problems with its bespoke P&W PW6000 powerplant and in the end, only 80 were delivered, mostly equipped with CFM56 powerplants.

The A320 family’s sales success has been an order of magnitude greater than even the most optimistic market analysis from the time of launch.

“The original dossier for the return on investment [for government support] on the A320 had a business case for 800 aeroplanes in the whole life of the programme,” recalls Tom Williams, who spent the last two decades in Airbus senior management before retiring at the end of 2018 from the role of chief operating officer. “And the UK government redid the business case – because they didn’t believe it – at 600.”

To put that into perspective, by May 2019, total A320-family deliveries had passed 8,850 aircraft, with a further 6,300 on order.

NEO CAPABILITIES

A key decision to further the success of the A320 was the launch of the re-engined A320neo in 2010. Powered by P&W’s PW1000G geared turbofan (GTF) and CFM International’s advanced Leap-1A engine, ­orders for the Neo variants alone now stand at 6,500 aircraft, accounting for more than 40% of all A320 sales. It has also enabled Airbus to create a very capable extended range single-aisle in the form of the A321LR.

But taking the decision to launch a re-engined A320 was not straightforward at the time, recalls Williams. “That was a big decision because the fear was that we’d end up destroying the current orderbook, customers would defer etc. And the A320 was of course the cash cow of the business,” he says.

“The other concern was that if we tinker with this product, at what point do we do something that becomes dysfunctional?”

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When A380 flew in 2005 it had passed 150 orders, but sales momentum waned

Airbus

While the strong sales the A320neo subsequently enjoyed make that decision now look inspired, Williams points out that the original motivation was concern about the threat from Bombardier and its CSeries – the GTF-powered 110- to 140-seat programme that Airbus purchased from Bombardier in 2018 and now markets as the A220.

“I like to remind Tom [Enders] when we’re celebrating that we’ve now got the A220 that we launched the A320neo with the express purpose of killing the CSeries,” says Williams. “It was visionary people like [former Airbus sales executive] Kiran Rao who were saying that these guys will do to Airbus what Airbus did to Boeing – they’ll come in at the bottom end and eat their way up and cut off your cash cow.”

Despite Airbus starting life in the widebody arena, Toulouse has found replicating its single-aisle success in this sector much more of a challenge. With the original A320 launch under its belt, in the mid-1980s, Airbus turned its attention back to establishing a broader widebody line-up so it could really take the fight to its US rivals in the long-haul sector.

Airbus was content that its original widebody fuselage cross-section was still in the sweet spot, so its focus for its product expansion was around a new wing and a variety of engines – both in terms of types and number.

“There was much internal debate whether to go with the big-twin or the quad,” recalled Adam Brown, Airbus’s vice-president for strategic planning, to Flight International in 1997.

“The majority of potential customers were in favour of a quad despite the fact, in certain conditions, it is more costly to operate than a twin... They liked that it could be ferried with one engine out, and could ‘fly anywhere’ – remember ETOPS [extended twin-engine operations] hadn’t begun then,” said Brown in 1997.

Airbus’s then chief engineer, Jean Roder, is credited with creating the plan that enabled the two widebody designs to effectively become one: the A330/A340 twin/quad family.

“Roder was able to create a common wing structure, with the quad’s outboard engines providing bending relief to counteract the increased weights of the long-range model,” said Brown.

The market’s more urgent requirement for the quad put the A340-200/300 at the front of the development plan, with the first aircraft entering service in March 1993. The A330-300 “big-twin” quickly followed, making its debut in early 1994 but very much pitched as a medium-range sister to the long-haul A340.

The A340 enjoyed moderate success, easily seeing off the MD-11 derivative of the DC-10. But Boeing’s all-new 777 was a different proposition and provided stiff competition. Also, Boeing’s established smaller twin, the 767-300ER was proving extremely popular in the longer-range market.

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China is a key market for Airbus, where national carrier’s fleet includes eight A350s

Airbus

Airbus hesitated to react to sluggish sales of the A330-300, but rejuvenated the twinjet’s fortunes with the launch of the short-fuselage, longer-range -200 version in November 1995. The A330-200 debuted in 1998, finally providing Airbus with a direct competitor to the 767-300ER.

Combined with weight growth derivatives of the A330-300, Airbus’s widebody twin family established itself as the market leader in its sector in the early 2000s – prompting an aggressive response from Boeing in the shape of the all-new 787 Dreamliner.

Meanwhile, as sales of the A330 family were recovering in the late 1990s, Airbus saw an opportunity to create an efficient high-­capacity widebody from the A340, through a major re-engining effort than involved a stretch, a larger wing and new R-R Trent 500 engines.

When it was launched in 1997, the ­A340-500/600 looked to offer a payload/range capability that Boeing would struggle to mirror with its 777 twinjet. However, by the time it debuted in 2002, GE had managed to wring 115,000lb-thrust from the GE90, allowing Boeing to create the extremely capable ­777-300ER.

“At the time [of the -600’s launch] there was a belief that the A340 was a good aeroplane, because it was only competing then with the 777-200ER, which was not a great aeroplane,” says Williams. “But the -300ER was a great aeroplane and blew the A340 out of the water, quite frankly.”

By the turn of the century, Airbus was preoccupied with two pressing needs, to reorganise into a consolidated business structure and to top off its product line with a flagship airliner to rival Boeing’s jumbo jet.

“We had an overwhelming need to fight the Boeing 747 – our competitor has used it to cross-subsidise other markets,” then Airbus ­financial controller Ian Massey told Flight ­International in 1999. “We couldn’t do this $11 billion programme under the old structure.”

The A3XX, as the A380 was known prior to launch, emerged from Toulouse in the wake of transatlantic talks during the early 1990s over a joint ultra-large airliner (ULA) project. When talks were abandoned in 1995, Airbus set about establishing its own programme in earnest, while Boeing reactivated 747-based derivative studies.

The A380 was launched at the end of 2000 with the support of 50 orders from six customers amid bullish projections of a long-term market for over 1,600 passenger and freighter ULAs.

When the A380 flew in April 2005, orders had just topped the 150-mark. Airbus had secured 15 customers (including two for the subsequently stillborn freighter variant) and then deputy commercial chief Christian Scherer (who now heads that division) told FlightGlobal that the sales momentum, adding two new customers annually, was “a good cruise speed”.

“If you look at our 150 orders, that represents four years of production,” he said in 2005. “This aircraft is a production tool that drops an airline’s costs 15-20% – you want to get your hands on it if you can afford it.”

Subsequently of course, the airliner failed to maintain that momentum and aside from Emirates’ voracious appetite, customers balked at expanding their A380 orderbooks.

SALES STALLED

Despite the determined efforts of Airbus super salesman John Leahy to make the A380 a commercial success, using memorable tag lines like “Airbus is saving the planet one A380 at a time” to emphasise its green credentials, the orderbook stalled. Airbus finally called time on the programme in early 2019, with production set to end in 2021 after around 250 deliveries.

Reflecting on the A380 launch decision two decades ago, Williams says “the world looked a different place” back then.

“You could argue: ‘Was the A380 the right decision?’ There was a lot of hubris at the time. Airbus seemed to be on a roll and the A380 seemed to be the next logical step,” he reflects. “All the analysis was saying that hub and spoke, ‘mega-cities’, that was the way to go. There was a lot of argument at the time whether it was or not.”

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A321LR is the ultimate Airbus single-aisle – although plans are afoot for an enhanced “XLR” version

Airbus

The sales team’s efforts to expand the A380 orderbook were not helped by the industrial meltdown that the programme ran into as Airbus tried to move to series production. By the time of first flight, Airbus was well down the road in its reorganisation, led by an integrated multinational management team with British, French, German and Spanish arms. The shareholder structure was simplified too, with the French, German and Spanish partners consolidated into EADS holding 80% and the remainder with the UK’s BAE Systems.

But as A380 flight testing got underway, it emerged that a fractured relationship between partners had created the infamous wiring issues that blighted Airbus’s attempts to transform the programme into series production. This led to a programme delay of more than a year and spiralling costs.

“The problem was that the A380 became all consuming, it was like a huge machine that was chewing up money and people and resource,” recalls Williams. “In the end we overcame it and stabilised the situation.”

Amid the A380 turmoil, which came with the integration effort, there was a “revolving door” within Airbus’s leadership with Noel Forgeard and Gustav Humbert resigning in mid-2006, and the latter’s successor Christian Streiff lasting just four months before Louis Gallois and Tom Enders steadied the ship.

In parallel with the management turbulence, the UK partner decided that Airbus should no longer play a part in its long-term strategy as BAE increased its defence focus. BAE thus sold its 20% stake to EADS in October 2006 for £1.9 billion ($3.6 billion at that time) – a decision it would subsequently explore reversing.

With Airbus distracted by the A380 crisis, Boeing struck back – not with an all-new ultra-large competitor but a twinjet designed to render obsolete the now strong-selling A330. From the moment of its 2004 launch, the “clean-sheet” 787 immediately romped away with sales.

After first trying to ignore its rival, Airbus then decided to counter-attack by warming up the A330 and competing on price. Thus the “A350 mark 1” was created in late 2004, incorporating a new wing, new materials and a version of the 787’s GE GEnx engine – and subsequently the 787’s R-R Trent.

Although Airbus landed some customers, this A330 derivative was struggling to move the dial like the Dreamliner. Further changes were introduced to make the A350 more competitive, but this “Mark 1A” derivative shared very little with the platform on which it was based.

“There were heated debates about the ‘1A’ version of the A350 – basically a re-winging and re-engining [of the A330] which in the end didn’t get a lot of traction in the market. We did have a reasonable number of orders, but it was never going to be a truly great aeroplane,” says Williams.

“There was also a lot of pressure from ­people like Singapore Airlines who were ­saying: ‘You’ve made all these improvements but kept the worst bit, which is the fuselage cross-section.”

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Re-engined A330neo fills the void left by the halted A350-800

Airbus

So at Farnborough 2006, Streiff – during his brief time at the helm – unveiled a radical rethink with the all-new A350 “Xtra Wide Body” (XWB) family. Now built largely from carbonfibre like its Boeing rival, the XWB boasted a wider fuselage than the 787 and exclusive power from R-R in the form of the Trent XWB.

“There was a lot of heart-searching with [then EADS chief executive] Tom [Enders] and [then Airbus chief operating officer] Fabrice [Bregier] and it was a very brave decision to reset the clock – I think we made the right decision to restart with the XWB,” reflects Williams.

The new XWB was certainly third time lucky for Airbus, securing some key wins in the marketplace and providing Toulouse with a bona fide competitor to the Boeing widebody suite. However, the grandiose XWB family plan unveiled by Streiff did not quite play out as hoped. Although the baseline A350-900 has spawned a larger sibling – the A350-1000 stretch – by the time -900 flight testing was underway, the -800 shrink had been shelved.

In its place was a re-engined “A330neo” derivative – which partly revisited the original A350 plans from a decade earlier. However, this time, Airbus kept its ambitions in check, ensuring that the Trent 7000-powered twinjet maximises commonality with its predecessor – and similarly its appeal to existing operators. The baseline A330-900 variant made its debut with TAP Air Portugal at the end of 2018, as flight testing of the smaller -800 progresses towards certification later this year.

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Beluga family comprises original A300 version (left) and new A330-based XL variant (right)

Airbus

During its five decades, Airbus has undergone extraordinary transformations in terms of product line, structure, and production set-up. It has remained faithful to its philosophy of “light final assembly” whereby the bulk of the production work is carried out during the sub-assembly process. Completed sub-assemblies are moved around the European production network by a fleet of “Beluga” outsize cargo aircraft (originally derived from the A300 airframe – and soon to be joined an A330-based “XL” version).

Its production philosophy has helped Airbus make some key strategic moves to grow its international footprint. It opened an A320-family final assembly line in Tianjin, China in 2008 and delivered its first single-aisle assembled in Mobile, Alabama, in 2016.

Airbus has struggled to replicate the success it enjoys in the passenger market in the cargo arena. The all-cargo version of the A300 proved popular in the 1990s but orders for the freighter derivative of the A330-200 have been slow (although the A330 military tanker has sold widely). Then there was the saga of the A380F, which secured two blue-chip customers – FedEx and UPS – only for the programme to be cancelled.

New Airbus group president Guillaume Faury takes the helm to steer Airbus on course for its next 50 years with a clean slate. With the A380 – so long a costly distraction for the old guard – now terminated and other programmes in the ascent, Faury and his fresh young leadership team are positioned to fly Airbus ever higher. If Airbus’s next half century is as eventful as its first, it promises to be one heck of a ride.

Read every story celebrating the 50th anniversary of Airbus here

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