Recent Developments Within Airbus SAS

There have been several developments within Airbus SAS over recent weeks and speculation over how these might affect the Airbus UK wing assembly facility at Broughton.

On 2 July the EADS Chairmen, Manfred Bischoff and Arnaud Lagardere announced that the Board of Directors had accepted the resignation of Noel Forgeard as EADS Chief Executive Officer, as a member of the EADS Board, and as Chairman of the Airbus Shareholder Committee, as well as the resignation of Gustav Humbert as Airbus Chief Executive Officer and member of the EADS Executive Committee.  

The Board has appointed Louis Gallois as EADS Chief Executive Officer and he will join CEO Tom Enders in leading EADS.  Mr Gallois was to date President of the French railway company SNCF, and has broad experience in industrial and especially aerospace businesses.  Christian Strieff has been nominated as Airbus Chief Executive Officer and appointed as member of the EADS Executive Committee.  Mr Strieff has managed various industry and technology businesses of the Saint-Gobain Group and became its Deputy CEO in 2004.  He will report to Mr Enders, who has been nominated as Chairman of the Airbus Shareholder Committee, subject to the Committee’s confirmation.

These changes follow delays in the A380 Super Jumbo project and controversy over share sales in the weeks before the problems with the A380 project emerged.  To assist continuity Messrs Forgeard and Humbert will stay on as special advisers to their replacements until at least the end of the year.  There is no reason to believe that these changes will have any adverse impact on the Broughton facility.

The delay in the A380 project is about a year and has been caused primarily by problems with the wiring systems.  It is likely to have an adverse affect on Airbus profits.  Nevertheless, test programmes are going very well and customer reaction to the aircraft has been good, so its long-term future looks very promising.  Airbus has listened to the reaction from airline customers on the new A350 aircraft and decided that a radical redesign of the fuselage and wing is necessary to compete with the successful Boeing 787 in the mid-range market.  This will cause delays and increase the development costs but should result in a far more successful aircraft in the medium to long term.

BAE Systems has decided to conduct a full audit of Airbus before it decides whether to push ahead with a £1.9bn sale of its 20% stake to EADS.  The 7,000 workers in Broughton are employed by Airbus and not BAE Systems.  Many more thousands of workers are employed by Airbus in Bristol and by other UK firms on supplying parts and services to Airbus.  There is no reason to suggest that this will change as a result of the sale.

According to a leaked report today, the Spanish government plans to increase its stake in EADS with the aim of increasing the Spanish work-share in aircraft production.  Fears have been sparked that the Spanish want to move production of the A380 wings from Broughton.  The huge investment at the Broughton facility for A380 assembly, coupled with the conditions attaching to the UK Government’s contribution of £530m repayable launch investment, make this extremely unlikely.  This is all speculation but there is continual competition within Airbus for work-share, as is usual with all large global companies.  However the UK is recognised as the wing centre of excellence and Airbus UK is confident, though not complacent, of the security of future production at Broughton.  

Whilst there are delays with the A380 and A350 projects there is a ramp-up of production of existing single aisle, medium and long range aircraft and the Hawker Executive Jet (the fuselage and wings are manufactured at Broughton).  A combination of the redeployment of some of the A380 workforce and changes to shift patterns means that no job losses are envisaged at Broughton.  In fact the scheduled intake of 100 new apprentices in September is still going ahead.  Airbus UK regards job protection for its skilled workforce as paramount.