Scrapping A380 gives Airbus’s new CEO a clean slate

Bloomberg

The news started coming thick and fast even before the sun was up over Airbus SE’s headquarters in the French city of Toulouse.
There was a lot to digest: earnings, writedowns, cancelled and shifted orders, and not least the landmark decision to end production of the A380 doubledecker, an albatross of a plane that had hung awkwardly around the necks of company executives for years.
By midday, the landslide of revelations had subsided and a calm Guillaume Faury stood in front of the cameras, trim in a blue suit and white shirt without tie, offering an upbeat message: “We are looking into the future with a very positive mindset,” he told Bloomberg TV in an interview. “Now the future is clear.”
Faury, 50, is weeks away from inheriting the top job at Airbus from Tom Enders, and he can thank his predecessor for removing an overhang that had clouded its outlook for the better part of a decade. Scrapping the A380 may have been a painful decision, as Enders put it, but it frees up resources for profitable programs and helps Airbus focus on what it does best: making nimble airliners like the A320 and the bigger A330neo and A350s that compete head to head with Boeing Co. in the increasingly important market for point-to-point travel. With flight patterns changing, the A380 and Boeing’s own 747-8 — both focussed on big hubs — have become out of date.
‘PAINFUL’ DECISION
Trying to steady the A380 program had been a herculean task for Airbus for years.
Enders himself acknowledged the effort when he said that it was “painful to take the decision after all the effort, after all the money, after all the sweat.”
Highlighting just how many resources the doomed program still occupied, Airbus said that as many as 3,500 jobs will be affected by the demise of the double-decker, which will cease production in 2021.
Faury said he pored over the decision together with Enders, and that the Frenchman and his German colleague tried to find a solution “shoulder to shoulder.”
He acknowledged that direct flights are the way of the future, and that Airbus has the product range to serve that market, from its A220 — the rechristened Bombardier CSeries — to the A320 family and all the way up to the A350-1000.
Investors applauded Airbus’s announcements, sending the stock up as much as 6.3 percent to 110.94 euros, the biggest gain in a year.
Enders laid the table for a fresh start for his successor. In addition to scrapping the flagship superjumbo, Enders, who stands down in April, announced extra costs for restructuring the A400M military transport program and revealed the loss of a major order for the planemaker’s newest wide-body jet. He lauded the defense and helicopter arms that have struggled for sales, saying they are “in good shape” for Faury and his team to take over.
Despite all of the house-cleaning, Faury still has work to do. There’s the specter of a no-deal Brexit, which Faury said would be “a disaster for Europe, for the UK and for Airbus.” While the company has spent months preparing for all scenarios, stockpiling goods at other sites to maintain seamless production, any disruption that would extend beyond a few weeks would bring unprecedented strain, Faury said.