What's wrong at Airbus? Will the A380 sink the ship?

[Kuciwalker]

Re: Re: Re: What's wrong at Airbus? Will the A380 sink the ship?

Originally posted by Oerdin
I have to agree with fake boris on this one. Competing and winning actual contracts is not the same as simply giving a company money.

I think you missed fakeboris' [/sarcasm] tag.

[Dinner]

Originally posted by Thorgal
IIRC Boeing tried that yet and failed. It seems they are not very clean on that topic either...

http://news.bbc.co.uk/2/hi/business/3569062.stm

That was just a retarded attempt by the EU to justify their blatant subsidies with a sniviling "BUT, BUT, BUT... THEY DO IT TOO!!!" (must be said while crying big crocodile tears). The only problem is the EU's accussations are 100% BS. Airbus is free to bid on those contracts and several US aircraft makers freely compete with Boeing for contracts. Just because Boeing outcompetes the inferior European companies doesn't mean it is being subsidized.

[Thorgal]

Ahhh, if you say so... The thing is that Boeing stopped whining since then.

[DanS]

Looks like the heart transplant has been rejected by the patient...

The rumor surfaced Friday and was confirmed by the FT over the weekend...

It's amazing that the affairs of a corporation are the subject of a hastily arranged cabinet meeting and summit between heads of government. Not at all healthy, IMO. And the Russians buying into the company is an interesting twist. Actually, it seems possible that the Russians could provide something of an answer to Airbus's cost structure problem. If you're going to create a geopolitical bastard of a company, you might as well do it completely.

http://business.scotsman.com/latest.cfm?id=1491472006&format=print

Sun 8 Oct 2006
Questions on Airbus chief as more turbulence looms

By Noah Barkin

BERLIN (Reuters) - Plane-maker Airbus faced another stormy week as speculation mounted that CEO Christian Streiff could bolt the firm after just three months in the job and Franco-German tensions rose amid the looming threat of job cuts.
Click to learn more...

An article to appear in Monday's edition of German newspaper Frankfurter Allgemeine Zeitung reported that Airbus parent EADS was searching urgently for a successor to Streiff after he submitted his resignation last week.

Echoing other reports over the weekend, it said EADS had lost confidence in Streiff amid disagreements over his cost-cutting plans for the Toulouse, France-based jet maker.

A spokesman for EADS , Europe's largest aerospace and defence group, declined to comment on the unsourced report, calling it "speculation". Airbus denied its new CEO was leaving when reports of his resignation first surfaced on Friday.

Streiff got a vote of confidence on Sunday from French Prime Minister Dominique de Villepin, who said he should stay. "He is doing a formidable job and there is no reason for Christian Streiff's resignation," Villepin said in a televised interview.

The departure of Streiff would represent another major blow to EADS, which saw its shares tumble last week after it announced new delays in its A380 superjumbo -- a plane it hoped would deliver a knockout punch to U.S. rival Boeing .

Formed in 2000 from a merger of leading German and French aerospace firms, EADS had hoped Streiff would be the man to turn around Airbus, whose previous chief Gustav Humbert and EADS co-CEO Noel Forgeard were forced out in July because of problems with the A380.

The world's largest airliner is now two years behind schedule as engineers struggle to overcome wiring problems.

In response, Streiff has vowed to cut costs, saying deep changes are needed at its network of manufacturing sites. But his plans appear to have run into resistance in EADS management circles as well as the French and German governments.

EADS has pledged to consult workers before selling plants or cutting jobs, but that has not allayed deep concerns in Germany that the 12,000 staff who work for the firm in Hamburg are at risk. German politicians have warned the firm that looming arms deals could be at risk if jobs go.

FRANCO-GERMAN TENSIONS

The problems are rekindling Franco-German tensions that have plagued the firm since its creation and burst into the open last year amid a power struggle led by Forgeard -- the Frenchman who launched the A380 project.

In a weekend magazine article, German Defence Minister Franz-Josef Jung warned against the French gaining too much influence in EADS, which has a dual-management structure to preserve Franco-German balance.

"We must prevent things from moving in the direction of the French," Jung was quoted as saying in Der Spiegel.

German Chancellor Angela Merkel and French President Jacques Chirac are due to meet in Paris on Thursday and will discuss the firm's problems.

The German government is believed to be worried that France or Russia could seek to boost their stakes in EADS, upsetting its delicate shareholder balance.

The French government owns 15 percent of EADS, while German car-maker DaimlerChrysler and French media group Lagardere are reducing their stakes to 22.5 percent and 7.5 percent, respectively.

Last month a Russian state bank bought a 5 percent stake in the firm. Speculation surfaced over the past week that Berlin could also buy into the firm to safeguard its interests, but the government has said it has no current plans to do so.

[TCO]

Let the free market handle it.

[dannubis]

As with your steel industry ?

and probably many others...

[Dinner]

Bush was a piece of **** for slapping illegal tarrifs to protect his ass in steel producing states.

Dan: I just don't see what makes the Eclipse any better then the Cessna 6 passenger Jet or better then one of the other 4-6 small jet makers on the market today.

[DanS]

Price. The Eclipse is $1.5 million. The Cessna is at $2.6 million.

[Dinner]

That is significant. I expect the plane to be light on the specifications though. Inferior avionics, etc...

Either that or Cessna and all are just used to making fat profits.

[DanS]

Cessna has propeller planes that it might make sense to protect. Eclipse doesn't have such legacy products.

On the other hand, even though the Eclipse avionics package is getting excellent reviews, the Cessna is getting good reviews on its interior design. It better, for $1.1 million extra.

[Dinner]

Yeah, maybe Cessna and Piper and all are using their jets to subsidize their turbo prop planes but I don't think so. I'm judging based upon the sky high price of even a Cessna 152.

[DanS]

Originally posted by TCO
Let the free market handle it.

Sing it, brother!

[DanS]

And it's official. The CEO who was trying to rationalize the business is gone and will be replaced by the politicians...

From the WSJ...

Airbus CEO Streiff Resigns Post,
EADS Gallois to Be Interim Chief
By DANIEL MICHAELS and DAVID GAUTHIER-VILLARS in Paris and STEPHEN POWER in Frankfurt
October 9, 2006 3:29 p.m.

Airbus Chief Executive Christian Streiff resigned and will be succeeded temporarily by a top official from European Aeronautic Defence & Space Co., the corporate parent of Airbus.

Louis Gallois, co-chief executive of EADS, will run Airbus on an interim basis, until a new chief executive can be found.

Differences between Mr. Streiff and EADS officials flared over the past 10 days. Germany's DaimlerChrysler AG, a major EADS shareholder, withdrew support for the former Airbus boss, according to a person familiar with the situation.

DaimlerChrysler, which is EADS's largest single shareholder with roughly 22%, believes Mr. Streiff created an untenable situation at Airbus, this person said. "The mess he has created is unacceptable," the person said. EADS's main French shareholders, media company Lagardère SCA and the French state, together also hold roughly a 22% stake.

An Airbus spokeswoman declined to comment, and Mr. Streiff couldn't be reached for comment.

Mr. Streiff, who joined the company three months ago, has over the past week threatened to resign unless he is given the freedom to run Airbus as he sees fit, according to people familiar with the situation.

EADS owns 80% of Airbus and expects this week to buy the other 20% from British defense company BAE Systems PLC. EADS managers have said for several months that once that deal is completed, Airbus would be drawn more closely into EADS.

Mr. Streiff, a newcomer to the aviation industry, was hired July 2 to lead a major restructuring at Airbus, which faces industrial problems. Troubles building the A380 superjumbo jet have put the $12 billion program two years behind schedule and more than 30% over budget. As a result of the delays, EADS has slashed its operating profit forecast for the next four years by €4.8 billion ($6.05 billion).

To deal with the problems and make its operations more efficient, Airbus announced a major restructuring plan last week. But since then, Mr. Streiff has told EADS managers that he wants greater autonomy in implementing the overhaul, including pushing ahead with factory closures and layoffs if necessary. Mr. Streiff, with backing from EADS, on Oct. 3 pledged to break "taboos" at Airbus, throwing open the question of whether Airbus's longtime distribution of work in Europe is the most efficient way of running the business. Splitting work evenly between France and Germany has been a basic rule at Airbus since its creation in 1970.

The person familiar with DaimlerChrysler's thinking said the auto maker wasn't opposed to a deep restructuring but didn't like Mr. Streiff's overall demands for autonomy.

Separately, French Prime Minister Dominique de Villepin Sunday said the management structure at Airbus needs to be streamlined to speed up decision-making.

Mr. de Villepin, who wasn't talking about Mr. Streiff's position, indicated in a radio interview that ensuring a balance between French and German interests is less important than ensuring that the company is efficient and competitive.

"Airbus must have the means to carry out its recovery. Discussions are under way between Airbus and [parent company EADS] to simplify internal decision-making processes that are too complex," Mr. de Villepin said.

Mr. de Villepin said France has to be "vigilant" in regard to jobs at Airbus, which employs nearly 50,000, including 20,000 in France. Asked about Airbus's need to balance its French and German interests, Mr. de Villepin said: "I didn't mention the need for balance, but the need to be efficient and to respond to the needs of the company. In this business, the first rule is efficiency...and I think best practice should be our guiding principle."

--David Pearson in Paris contributed to this article.

[Spiffor]

1. Louis Gallois has been running companies for 17 years. Including Aerospatiale (EADS' ancestor) for 4 years. He's not exactly a rookie, nor a politician, nor an inefficient-minded bureaucrat.
OTOH, he's used to manage companies with close ties with the French government.
That's quite unlike Christian Streiff, who had never touched aviation until three monthes ago, and who had no understanding of the French government, one of his main shareholders.

2. Streiff's restructuring plan will be kept.

[Dinner]

Minus the part about close redundant factories and sacking workers of course.

Just another example of why governments should not be allowed to own companies. The politicians want to run things for their own personal political gain rather then what is the best thing to do as a business.