Can You CEO Through It?
Contrasting views of Airbus and Boeing’s assessments on the air travel industry is nothing new.
Neither then is the manner in which Airbus’ CEO Tom Enders and Boeing’s BCA CEO Scott Carson both delivered their respective messages in two broadsheets this week - the key difference is one talks about what his company will do and the other talks about what his company wants to do.
Image courtesy of EADS
Mr. Enders piece today in the Financial Times was at best, a cry for help - not least to save the still-born calamity in the A400M that makes the 787 Dreamliner woes seem like a mountain out of a molehill. Contrast this to the repeated message from Mr. Carson in the Wall Street Journal who gave no less than several examples of “we” in terms of what the Boeing company is doing to tackle climate change.
Image copyright/owned by FleetBuzz Editorial.com
Granted, the topics the two CEO’s are/were covering are divergent and frankly irrelevant here - the issue is the delivery method and content.
“The crises we have encountered, the restructuring that has been required and the massive investments needed on future aircraft are putting Airbus and its main competitor under considerable strain,” says Enders in about the only comment that one can deem noteworthy.
Simple question - does anyone remember the party around Power 8? Where is it? What has it yielded for EADS and Airbus?
There was a reason Christian Streiff was jettisoned after just 99 days in the CEO role - partly because he was fed up at having to get out the proverbial begging bowl when EADS was short of cash (- as it is right now on the A350XWB which lacks both funding and a definitive OEW figures from Airbus’ website) and also because of jobs cull he had advocated to make Airbus more leaner and efficient.
On the one hand, Enders calls for Europe to be united (and not just united behind the flop of the A400M):
“In view of the forthcoming European parliamentary elections, it is important to recognise what Europe can achieve together.“
He goes on to contradict it all with this statement:
“We have to leave national sentiment behind us.…we must suppress the protectionist reflexes that the current crisis has triggered,” he adds.
Bizarre.
Of course, no Airbus statement would be complete with reference to more state aid and Enders made no secret of that, despite how his wording is analysed.
“Looking back over those first 40 years and looking ahead, it is clear that we need to adapt that pioneering spirit to the global economic environment that will face us in the second decade of the 21st century.“
Akin to the situation with GM Europe, this overt reference to the way Airbus was started out on the lashings of state aid, today’s economic crises along with bail outs and hand outs for all that seek it as fast as central banks can print money, Enders has set the ball in motion for financial aid on the A350XWB - a bill currently floating at around $18-22bn depending on your accounting and sources. To suggest it won’t rise yet further is perhaps premature…
Top that off with the $20bn (and growing) bill for the A380 program, and its clear to see why Airbus would not survive on the free market had it not been for the aid it has received since its inception propping up its backside.
Image courtesy of Airbus
“Tom Enders talks about the next 40 years. In reality, Airbus will be lucky to survive the next four years as the continuing drain on resources of its failed widebody programmes (A340, A380, A350XWB and A400M) continue to suck the life out of a company which only continues to exist to serve political rather than commercial ends.
The case has never been stronger for Airbus to be split in two, with the pragmatic Germans taking full control of all narrowbody production (not just most) while the French are left to nationalise their widebody jobs club. As things stand, the A350XWB will never be built, so something will have to give,” says Doug McVitie, MD of Arran Aerospace.
The once famous ”drive for market share at the expense of profitability” mantra (namely only the A320 program has churned a profit for Airbus) is testimony to that - throw in the financial tightening of the last twelve months, external funding aside from Governmental aid has never been a prophecy fulfilled by the EU in its aim to compete with the US aerospace sector.
“Technology and know-how are not lacking in Europe,” said Enders - and I agree.
For this reason (and maybe another 6133 more), Airbus should now stop the leaching on the breasts of the EU taxpayer and stand up for itself. Its gestation period has well and truly gone on for too long.
The debate on funding for Airbus and Boeing will never go away, but at least the US planemaker has had the courage to experiment with the 787 by distributing large portions of work to other partners without resorting to “Main Street” having to foot the bill.
Image courtesy of Randy’s Journal
As noted analyst Richard Aboulafia said once in an interview, “who cares where your ipod is made“. Boeing customers don’t care where the 787 is made either. Neither will they care where the next all new Boeing airplane is built so long as it does what they ask of it.
Mr. Enders had a wonderful platform to announce reform at Airbus and he has missed it. Whether he’ll make amends for that at next months Paris Air Show is questionable. Unlikely is probably accurate.
Boeing got burned with the issues on the 747 in the 1960’s and 1970’s - it nearly evaporated into the history books and has been hurt again with the 787 woes. However, its done all that and managed to see light at the end of the tunnel and a far more stable backlog than its European rival, held mercy to the litany of airlines wrapped in junk credit rating life jackets.
Fortunately, those who are not on the rent-a-quote Airbus payroll for “competitive intelligence” have the intelligence to see through the gimmicks and powder-coated wordings of the Financial Times op-ed offered by Mr. Enders - and it’s precisely why investors will never take EADS seriously until it stands up to be accountable for its own mistakes.
77 comments May 29th, 2009
