Tuesday, February 20, 2007

Is Airbus Spinning Out of Control?

Airbus, the European jetliner manufacturer, has run into some stiff turbulence that has led some to speculate the company may be about to break up.

The company which is Boeing's main competitor has had a succession of troubles since problems began surfacing with its A380 super-jumbo project. The double-decker A380 has encountered a number of technical setbacks that have already delayed deliveries by up to a year.

Airbus has recently been experiencing tensions among its principal shareholders over restructuring plans. Now the German group is rumoured to be discussing whether the company should be broken up.

The company is currently headed by a Frenchman, Louis Gallois, who has formulated a plan by cost-cutting and improved efficiencies involving more outsourcing and the sale of some Airbus factories. Integral to the plan was the development of a new aircraft, the A350.

German shareholders voted down Gallois' plan, apparently angry that German plants would receive only 10% of the A350 work compared to 35% for the French.

It seems that all Airbus partners want some downsizing. They all want to see the company rationalized. They just don't want their own national interests to bear the pain. With the Germans fearing a Gallic plot, however, salvaging Airbus may be very, very difficult.

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