Positive thinking

Although Airbus has taken several hits over the past month, including delivery delays and a decrease in orders, Habib Fekih, Airbus president for the Middle East, remains positive about the European manufacturer's presence in the Middle East.

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By  Barbara Cockburn Published  August 1, 2006

|~|feature-image-1.jpg|~|Habib Fekih, Airbus's ME president|~|Just when Airbus was trying to resolve delivery delays on its A350 and A380 aircraft, its CEO, Gustav Humbert, let go of the reigns and resigned. His departure caused a serious blow to the company at a time when the top official should have been injecting confidence and determination to overcome the difficulties. Co-chief executive Noel Forgeard also resigned, which led to French President Jacques Chirac, a political mentor whom he had served as industrial advisor, signalling a withdrawal of public support last month. Things could not be worse for the European manufacturer. Recently the company has faced weak sales figures, concerns over changes in a jetliner and the threat of a class-action lawsuit against parent company, EADS. Not only have these issues greatly affected orders and EADS’ share prices, which dropped by more than 10%, but the timing is also unfortunate. Last month the world’s most important air show, Farnborough, was supposed to be the launch platform for its A350. “Airbus is certainly not in a good position and things don't appear to be going very well,” says Richard Pinkham, an aviation analyst for the Asia Pacific region. “They used to have market leadership with their A320 for quite a while, with a lot of momentum. Also its A330 was better than Boeing’s 767 as it was a newer aircraft, with Boeing struggling to move forward. However, Boeing now has the 787. Airbus quickly responded with the A350 but it is currently not good enough. Also Boeing's 777 is much preferred in the industry to Airbus’s A340. Although Airbus has the wide body A380, it still has not clinched as many orders as expected.” He adds: “There are a lot of problems facing Airbus but these could be short term. We will have to wait and see.” So what is to become of the manufacturer that has dominated the skies for more than five years? Boeing's unveiling of its new 787 Dreamliner has certainly ruffled Airbus's feathers. Last month Airbus reported that sales fell by more then half in the first six months of the year, to 117 planes compared with 276 a year earlier. Boeing meanwhile, has reported 480 orders for the period, with the 787 Dreamliner helping the company, based in Chicago, to win the race to sell fuel-efficient mid-size jets. However John Leahy, Airbus's sales chief, brushed away the figures, saying mid-year order figures were far from definitive. “We'll wait and see which way this year ends,” he says. Boeing, Leahy notes, was ahead in the order race at this point last year, but Airbus ended 2005 with 1111 orders compared to 1029 for Boeing. He acknowledges that Airbus is having trouble with aspects of the A380 superjumbo, but he says the project is, by and large, on track and that he expects to win around 20 more firm orders for the A380 before the end of the year, bringing the total to 179. He says: “The rainbow at the end of the thunderstorm is that the plane is doing everything the airlines always hoped it would do and more.” However, out of the Airbus orders so far this year, 82% were for the older, single-aisle A320. “It’s tough to see how Airbus can possibly make up the deficit over the rest of the year,” says Doug McVitie, managing director at Arran Aerospace, a consulting company based in Dinan, France. McVitie strongly believes that Airbus will still be strong competitor to Boeing, as airlines need two strong aircraft manufacturers to keep prices in check. He says: “Most of the major airline bosses would hate to see a duopoly become a monopoly. So they’ll be anxious to see Airbus solve its problems. That will translate into patience and flexibility, and airlines will also think twice about their orders in case it tipped the balance too far in one manufacturer’s favour.” Many reports in the tabloids have criticised Airbus for lacking scope and failing to grab hold of changing technology. J.B Groh, an analyst at D.A. Davidson in Portland, US, says: “Airbus’s orders reflect customers confusion with the product strategy and acceptance of Boeing’s push to offer fuel efficiency with its Dreamliner, which makes its debut in 2008.” However, Habib Fekih, Airbus's President for the Middle East, remains positive about the company’s future within the Middle East and believes the challenges facing the company have been exaggerated by the national press. Fekih, talking exclusively to Aviation Business, says: “I am sick and tired of people reporting that Airbus is lacking vision and does not know where to go. The company understands exactly where it is going, the secret is that you don’t disclose everything in one go. Yes, there have been delivery delays on the A380 and the A350 but we have compensation schemes in place and we are confident we will keep these orders.” Emirates, Qatar, Gulf Air and Middle East Airlines are all looking to add Airbus aircraft to their existing fleet, but many have held back on their orders due to the delays. The A350 aircraft is currently undergoing its second re-design, pushing its delivery date to 2012, four years after Boeing's 787, and the double-decker A380 has been delayed another six months with delivery date expected to be in October 2007, instead of April. According to Airbus its former CEO, Gustav Humbert, who is expected to be replaced by Christian Streiff, deputy chief executive for French construction materials giant Saint-Gobain, resigned due to the delivery delays. Commenting on his decision, Gustav Humbert says: “The recently announced delay on the A380 production and delivery programme has been a major disappointment for our customers, our shareholders and our employees. “As president and CEO of Airbus, I must take responsibility for this setback and feel the right course of action is to offer my resignation to our shareholders.” However in a more positive light, Humbert adds: “I know it will, in time, be recognised that the current delay on the A380 programme is purely a temporary industrial issue. “It will have no effect on the performance and market recognition of this wonderful aircraft. Neither does the delay change Airbus' extraordinary overall growth prospects.” Fekih is not fazed by the CEO’s departure. “There will be no negative impact on the future of Airbus in the Middle East. The new management team will lead Airbus globally and reinforce its industry leadership and values.” Fekih is still confident that orders from airlines, such as Emirates and Qatar, which have been put on hold, will go ahead. He says: “We have compensation schemes in place and I am still confident the airlines will choose Airbus.” However, the real threat to Airbus is not its delivery delays or its CEO’s resignation, but Boeing’s deadly 787 Dreamliner. Fekih is not thrown by the aircraft and believes Airbus is on the same level when it comes to embracing new technology. He sheds some light on the competition. “I respect Boeing for the 787, but I don’t believe they have capabilities we don't have. I think Europe has a good combination of expertise and market knowledge. Boeing came up with the 787, and its true, it has a lot of advancements in new technology, but lets put all the hype on hold and take a serious look. What is the 787 bringing that the A380 is not bringing? More composite material?" Habib explains that both Boeing and Airbus use the same common features, such as their processors for TVs. He says the same suppliers, same manufacturers, and same technology is being used with both companies. “It’s like cars, they all use the same technology. It’s how you integrate the technology that makes the difference. At Airbus, we are aware of these technologies. “People are saying: ‘but look at the 787 using all composite materials. Have you heard what happened with their fuselage?’” In June, Boeing revealed that its ninth fuselage for the 787 failed to pass its testing process, but that its delivery date would remain unchanged. Fekih believes the fuselage failed due to Boeing just using composite materials. “You want the end result to be fuel efficient, cost less and have better performance. Just saying that using only composite materials is better and the way forward is misleading the customers,” he says. “With our A350 and A380 aircraft, we have avoided the misuse of just composite materials, which is not cost effective.” He adds: “Right at the beginning Airbus was saying that, yes, we offer composite material and we where pioneering in composite materials a while back. “We know how to use these materials cost effectively and to increase performance, like with the A350. “However, we also use other materials, such as aluminum and lithium, because we believe we cannot use composite material in every place, and obtain the expected results. We are using a mixture and are adapting to the different parts of the fuselage and other parts of the aircraft.” Boeing says that by using composite materials it will become 20% more fuel efficient than its predecessors, such as the B767-200, and this is becoming the major factor behind the aircraft’s success. Even Fekih believes there is room for improvement with Airbus aircraft. He says: “We are currently studying new technologies and evaluating whether in the next few years we will introduce a new family. “However, we need a lot of improvements, especially on the engine side, to justify replacing aircraft.” But Fekih also believes that technology for the sake of technology is a waste of time. “We are analysing the market and our customer’s requests. We have technical teams evaluating solutions. “The requirements have to be feasible and we have to consider whether it’s worth investing in. “Look at the 200-seater aircraft for example, we used the right amount of technology, which is why we are leader in this market.”||**||

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