Air Transport World

E pluribus unum. (planned restructure of Airbus Industrie)


After 26 years with a cozy, close-to-the-vest financial structure that helped it gain 30% of the world's large civil air transport market, Airbus Industrie is about to undergo deep and significant organizational changes that its management long has sought.

This radical redesign aims to make the 4-nation aerospace consortium fiscally transparent, as well as less bureaucratic and far more efficient and cost-effective than now. The ultimate goal is to achieve parity with the big U.S. manufacturers and raise its share of the market to 50%.

Along the way, Airbus will achieve its first understanding of the cost of building one of its airplanes. At present, the only components Airbus is allowed to price and purchase are the engines. Everything else is purchased or produced by the partners, who keep their Airbus costs to themselves. Production responsibilities are assigned with political and cooperative considerations far outweighing cost and efficient. In order to gain some degree of understanding and control of the process, the system must change.

This ambitious target is not going to be achieved without some pain, particularly for the four partner companies, Aerospatiale, British Aerospace, CASA and Daimler-Benz. They must surrender control and ultimately, ownership of Airbus, allowing it to become a new European public company controlled completely from the existing headquarters in Toulouse.

The course this transformation will take was debated by a high-powered committee headed by Edzard Reuter, chairman of the Airbus supervisory board, and consisting of four senior business people from outside the aerospace industry. Their recommendations were delivered to the Airbus partners and the partners' governments last month (ATW,, 7/96).

Reuter and his committee colleagues were not sufficiently starry-eyed to believe that a raft of Airbus lore, built up over a quarter of a century, could be dismantled overnight, and suggested pragmatically that there should be two stepping stones between the consortium's current financial situation and a full-blown public limited company.

During these interim stages, the central bureau of Airbus gradually would take over functions carried out today by the partners, starting with departments such as forecasting and public relations, then getting a handle on partners' costs and finally, allowing it to write contracts with vendors. In this way, the partners would be eased out of their current independence until they finally committed transfer of their 35,000 employees to Airbus control within the framework of a true formal company with a capital structure. Some see the likelihood that some institutional debt will be converted into equity.

Final decisions on the future shape of Airbus Industrie will be made by the supervisory board. But the governments of the four partner countries also will have a big say. Ministers in charge of aerospace from those countries will meet at next month's Farnborough air show, where they are expected to reject the option of Airbus's remaining essentially unchanged as a GIE out of hand on grounds that little improvement is possible and that the current unsatisfactory Airbus accounting situation would be perpetuated. …

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