1:17 PM

Can Airbus

The recent news out of France regarding Airbus struggling to make the decision to proceed with building the A350 Extra Wide Body (XWB) is just the latest blow to the troubled manufacturer.

As reports around the world describe how Airbus is fighting to retain enough cash to stay competitive, some “experts” have gone so far as to say they will not be able to pull out of this current nose dive. I can’t go that far, but more bad news for Airbus is bad news for commercial aviation as a whole.

With Boeing’s 787 Dreamliner said to be outselling the A350 4-to-1 in pre-production orders, it is now unclear if the European conglomerate will spend the USD$10 billion it needs to bring new designs for the A350 to market.

It’s being reported that Airbus Chief Executive Louis Gallois said that parent company EADS would make the crucial A350 project launch decision by the end of November. Gallois has been quoted as saying that the only way the plane will be a “go” is if the company can stop their financial train wreck with a planned restructuring plan known as Power8, which aims to save USD$2.56 billion by 2010. I’m not a math wizard, but that savings seems far from the USD$10 billion needed for a "go" on the A350.

One quite obvious (and really, really big) financial strain on Airbus is their recent glitches bringing the behemoth A380 into production. Several years worth of delays have led to penalty payments to airlines...and recently, Airbus suffered its first major A380 order cancellation when FedEx pulled their orders and moved their business for extremely large freighters to Boeing.

You know it’s bad when this happens:

French Prime Minister Dominique de Villepin flew to Airbus's Toulouse factory bearing EUR80 million euros (USD$102.5 million) in aid for suppliers who have been hit hard by delays to the A380 superjumbo.
But all is not lost – at least for now. While the high end of the Airbus line struggles to gain a foothold in their market, sales of single-aisle models continue to be strong. Low-cost carrier easyJet recently dropped major bucks on a large order of 52 A319s – an order that came at precisely the right time for the EADS CFO to smile…if only just a little.

So I must ask the question: What would happen to commercial aviation if Airbus were to go belly up? Your first thought is that the guys and gals in Boeing’s Everett and Chicago offices would be dancing in their cubicles, having become the “last maker standing” in this planet’s airliner reality show.

There are other makers out there who could possibly step into the void:
Both Bombardier and Embraer make damn fine regional aircraft, and might be positioned to re-tool and build larger airliners, but would they have the cash for such a major endeavor…and would they want to tussle with Boeing? Or would your next ride through the skies to Grandma’s house be in an airliner that has Tupolev, Ilyushin or Antonov painted on the tail?
Airbus’s Power8 restructuring will be watched by nearly everyone related to commercial aviation. I am rooting for them to cut their losses, build the A350 XWB and the A380, and remain a formidable competitor against Boeing. That's because I'm a believer in free market forces, and it is never, ever good to have one company be the only maker of something so important to our culture as large airliners.

Imagine what gas prices would be like if only one company distilled dead dinosaurs into the explosive juice we are allegedly so addicted to.

Oh wait…that’s damn near happening already. Never mind.

You Might Also Like