Saturday, March 03, 2007

Dog bites man…

European governments have been interfering with commercial decisions in Airbus, shock!

Louis Gallois, chief executive, watching the company go down the pan and unable to make decisions in its best long term-interests, is now complaining about it. Even bigger shock!

That is the thrust of a Financial Times interview with Gallois, and all of a sudden the issue becomes very boring in its predictability.

The chief executive has attacked European governments "for haggling over the spoils at the struggling aircraft maker" without having regard to its long-term fate. He tells the newspaper: "I was very surprised to see that every government, the British, the French, the Germans and the Spanish were all saying we want the best share of the cake, we want composites and high technology and so on."

He then declares, "My job was to save Airbus and give a future to Airbus … I saw a lot of people wanting the best share of the cake and the size of the cake was not important to them. I said it was most important that in 20 years we still have an Airbus."

The way the company is going, he will be very lucky indeed – although Gallois will have moved on much earlier, if he has any sense. Already, the writing is on the wall, with the last remaining customer for the A380 freighter, UPS, calling for its order to be postponed and then, finally, according to Reuters and others, cancelling it completely, joining rival FedEx which cancelled an identical order last year.

What now transpires is that the cancellation was unexpected. UPS did agree to a delay in taking deliveries of its 10 aircraft beyond 2010, but then EADS and Airbus confirmed a news leak that Airbus would temporarily stop work on the cargo version. UPS responded with a statement saying it had lost confidence that Airbus could fill its orders in a timely manner, and decided to walk away.

Nevertheless, Airbus is exuding confidence that it can start delivering the passenger version of the A380 in October, and it will probably make that happen by dint of pouring resources into making it happen – should the unions co-operate, and not go on strike.

Even now, the company is talking about even more outsourcing, contracting and then moving work to low-cost countries, plus the prospect of enforced redundancies, something it has avoided talking about before now.

Despite all this, though, the company is asserting that there will be no delays to deliveries of the A400M military airlifter. But this is from a company that denied that there would be any delays to the A380 – and look where we are now.

The sad thing is that the world actually needs Airbus. Even the most rabid Atlanticist will recognise that handing a near monopoly of civil aircraft building to Boeing is good for no one. Competition on a world scale is very necessary for suppliers of what is a global industry.

It says something, therefore, that the company and the European governments that effectively control Airbus, through their loans to meet start up costs of each model, have made such a mess of what once looked like a successful business.

But then, European governments messing up a joint enterprise… Definitely dog bites man.

UPDATE

Spiegel Online has an interesting commentary. It cites the "left-leaning daily" Berliner Zeitung, saying: "The case of the wobbly company Airbus shows just how widespread economic nationalism is. More than that, though, Airbus says a lot about Europe itself - about how the European Union functions and about where the limits to cooperation are ..."

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