No Surprise: Airbus Grounds Top A380 Exec

For Spend Matters readers, it should come as no surprise that Airbus has replaced its top executive on the A380 program. This news follows an announcement earlier this summer that Airbus was "planning a full review of the A380 supply chain". According to Bloomberg, in this latest action, Airbus’ new CEO, Christian Streiff, "gave the job of running the A380 program to Mario Heinen, 50, who oversaw the A320, Airbus's best-selling plane program." For Airbus, it is a shame that the ouster of the old program manager could not have happened sooner. The warning signals for the giant plane's delays and cost overruns go back years to 2004, when Airbus "disclosed the plane would run 1.45 billion euros over budget," according to the story. Then, in June of 2005, Airbus told airline customers that deliveries of the first A380s might be as much as six months late because of difficulties installing wiring in the aircraft. Despite the fact that Airbus, like Boeing, has been a strong proponent of effective sourcing and procurement practices in its other areas with different platforms, the failure of the A380 programs shows that it is the universal -- not the selective -- application of Spend Management that yields results. There is simply no excuse to come in both late and over budget on such a high profile program.

It's my view that you can never cut your way to profitability with older cash-cows (e.g., the A320), while ignoring the bottom line on a future generation of products. And certainly while we can all agree that this latest move is a push in the right direction, there's a good chance that it will take Airbus years to recover, given that the A&D giant had bet the proverbial farm on its new super jumbo platform. Perhaps BAE had it right when they announced earlier in the week that they would sell their remaining shares in Boeing's top rival. I'd reckon the dumping of Airbus -- both by shareholders and customers alike -- is only just beginning until they can deliver on the A380. Given the need for competition in the commercial A&D platform market, I certainly hope that Airbus can right itself, lest Boeing start resting on its laurels.

Jason Busch

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