Airbus chief chief looks beyond the A380
Fabrice Brégier, new chief executive of Airbus, thinks he has the “best job” in European industry.
But it is also one of the most challenging managerial positions in the world. He has to oversee a highly ambitious increase in Airbus’ production of passenger jets, while at the same time ensuring its planned new A350 widebody aircraft does not suffer the same delays and cost overruns as previous programmes.
As if this were not enough, he also has the unexpected and complex task of sorting out a serious wing cracking issue on the A380 superjumbo, Airbus’ flagship aircraft, that only became fully apparent in January.
If Mr Brégier can juggle these challenges successfully, he will turn Airbus into a bigger profit generator for EADS, the aircraft manufacturer’s parent. Too often in the past six years, Airbus has been reporting operating losses or reduced earnings because of problems with the A380 programme and another focused on the company’s A400M military transport aircraft.
The plan to boost Airbus’ earnings is rooted in its effort to increase aircraft production beyond its existing record level, because the company has a large order backlog for 4,341 single and twin aisle passenger jets.
“This [production ramp-up] is a huge operational challenge, because the supply chain is under pressure,” says Mr Brégier, in his first interview since taking the top job at Airbus on June 1.
Airbus has 1,500 suppliers covering everything from aerostructures to engines, and some of these companies are contending with increased demands from Boeing, which is also increasing aircraft production.
The supply chain pressure looks most acute in the production of single aisle aircraft, where Airbus stole a march on Boeing by unveiling a revamped narrow-body jet with more fuel efficient engines, called the A320 Neo, which secured 1,226 orders last year.
Airbus is already making 40 narrow-body jets each month, and this should rise to 42 in the fourth quarter, and Mr Brégier describes the increase as a “hell of a challenge for the supply chain”, partly because some suppliers did not invest enough during the financial crisis in 2008 and 2009.
So Airbus has put on hold a tentative proposal to increase narrow-body production to 44 jets each month from 2013 or 2014.
Mr Brégier, previously Airbus’ chief operating officer, is keen to reject Boeing’s accusations that Airbus has unleashed a price war in the narrow-body market with the A320 Neo.
Ahead of the Farnborough air show next month, where Boeing is expected to secure orders for its revamped 737 single aisle aircraft with more fuel efficient engines, Mr Brégier says: “Who is desperate to catch-up? Who is desperate to make announcements in Farnborough? Me? No.”
Meanwhile, he is ready to “bet” that Airbus’ A350 twin aisle aircraft will not suffer the same level of delay that Boeing’s 787 Dreamliner jet did.
Fabrice Brégier
Aged 50; educated at Ecole Polytechnique and the Ecole des Mines; married with three children
Started career in 1983 as a test engineer at Creys-Malville nuclear power station
Worked as a civil servant in French industry and agriculture ministries during 1980s and 1990s
2001: appointed chief executive of MBDA, the European missile systems company created from French, Italian and UK assets
2003: became head of Eurocopter, EADS’ subsidiary making helicopters
2006: appointed Airbus’ chief operating officer, with responsibilities including restructuring and the A350 programme
The two aircraft have been high risk technology projects because Boeing and Airbus are mainly using carbon fibre reinforced plastic rather than aluminium alloy, and this switch of materials is a key reason why the 787 was delivered three years late to its first customer last September.
The A350 is due to go to its first customer by the middle of 2014, which would be one year later than originally proposed, but Mr Brégier says the revised timetable is “workable”.
The A380 is also going to preoccupy him because Airbus is busy fixing wing cracks on many of the 77 superjumbos that are flying today.
Emirates Airline, the largest operator of the A380, complained in March of significant commercial disruption because of having to ground its superjumbos for repairs to cracked wing components.
But Mr Brégier sees no evidence of a consumer backlash against the A380 because it is “safe” to fly, and he claims the superjumbo programme is “back on track” because Airbus is finalising a permanent solution to the wing crack problem. He also notes carriers are standing by the superjumbo, including Emirates.
It is partly aircraft orders from fast-growing Gulf carriers that give Mr Brégier confidence that Airbus’ production ramp-up is justified in spite of the eurozone crisis.
He stresses western Europe is a small part of Airbus’ market, and highlights large orders in the US and Asia. This means he is interested in whether Airbus can build more aircraft outside Europe by adding to its factory in China.
All of Mr Brégier’s strategy appears consistent with the one pursued by Tom Enders, his predecessor, who moved to become EADS’ chief executive.
Plain-talking Mr Enders is very different to the more reserved Mr Brégier, but their relationship will be crucial to the future success of Airbus and EADS.
Both men are acutely aware of the strategic threat posed by Comac, China’s fledgling aircraft maker, and Mr Brégier may have one eye on this new breed of competitor when he says Airbus needs greater “agility”. “We need to be faster in introducing innovation into our products and our ways of working,” he says.