CEO's Departure Raises New Fears for Airbus

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What's wrong at Airbus? The recent resignation of the chief executive adds to the turmoil at the European manufacturing conglomerate, which earlier delayed delivery of its much-heralded super jumbo passenger plane.

SCOTT SIMON, host:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. Coming up, can the Mets be amazing once again? But first, the European plane maker Airbus has had a sudden change of fortune. In 2005, Airbus and its parent company, EADS, were flying high, propelled by hopes for its A380 superjumbo, the largest passenger plane ever built. But last summer the company announced a delay in the plane's delivery, and after more production problems an even longer delay was announced last month.

Last Monday, the company's chief executive resigned after only three months on the job. Some observers are saying that Airbus is in real trouble. Rob Gifford reports.

ROB GIFFORD: At the Paris air show last year, executives from Airbus and from arch rival Boeing stood and watched an exhibition flight of the world's biggest passenger plane, the 550-seat A380.

(Soundbite of engine noise)

GIFFORD: Since its founding in 1970, Airbus has been a phenomenonally successful company and delivered more aircraft than Boeing in the last three years. The company promised with the A380 to continue to dominate its American rival, as orders flowed in for the new double-decker plane.

Now, little more than a year later, the tables have turned completely. Pierre Sparaco writes for the U.S. magazine Aviation Week. He says previous Airbus management had been too optimistic.

Mr. PIERRE SPARACO (Aviation Week): The Airbus management did underestimate the amount of work, not in terms of producing the aircraft as such but installing very complex systems onboard.

GIFFORD: The A380 was beset by problems. Each aircraft needed 300 miles of wiring. Airbus had promised to customize aircraft for individual airlines, and they were building the planes in the strong euro currency and selling them in the weak dollar.

Enter Louis Gallois, a former head of the French National Railroad, appointed as the new chief executive this week. Gallois said Airbus will need streamlined management and some radical restructuring.

Mr. LOUIS GALLOIS (Chief Executive, Airbus): (Through translator) It may be painful, of course, because there will be job cuts. The question of location will be asked, and it's obviously a serious question.

GIFFORD: That question of location refers to the curious Airbus production setup. The consortium that formed Airbus had 16 production sites spread across France, Germany, Spain and Britain. Some analysts say that's seven sites too many, maintained for political, not economic reasons.

President JACQUES CHIRAC (France): (Speaking French)

GIFFORD: French President Jacques Chirac showed just how political it all is this week when he weighed into the Airbus debate, saying any restructuring of the company would have to spread the pain of job cuts between the contributing nations.

Pierre Sparaco says a lot of Airbus's problems are the problems of the European Union itself: basic unavoidable national pride.

Mr. SPARACO: You could be very important, have the best design office in the world, you could be the best in the world in terms of technology. If you don't assemble and fly aircraft from your own country, from your own runways, in terms of image, and that includes political image, it seems, it appears that you are not really a strong aerospace player.

GIFFORD: Meanwhile, Airbus's multinational workforce waits to see how the promised restructuring will affect each factory. Airbus deputy chief engineer Rob Bray says the workers are just trying to get on with the job.

Mr. ROB BRAY (Deputy Chief Engineer, Airbus): When you read about your company in turmoil in the press, it does give you some concern, but really, in terms of the engineering, we know we've got a really good product. We know what we've got to do. We know we've got to work hard to deliver to the customers, and being engineers, we're interested in the aircraft and the engineering associated with it. So to a large degree it didn't affect us too much.

GIFFORD: Airbus's problems are not limited to the A380. The smaller A350 airliners also face production delays.

It's not all bad news. Airbus has just increased production of the smaller A320 airliner to meet customer demand, and so far no major airline has actually cancelled its orders of the A380. But analysts say if Airbus does not get its superjumbo sorted out soon, its problems could become much larger than the plane itself. Rob Gifford, NPR News, London.

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