Global Economics

Airbus Shakeup: A Sign of Things to Come?


For two months after he became Chief Executive of Airbus on July 2, Christian Streiff kept his flight plan pretty secret. He promised quick action to resolve what he described as a "serious crisis" in the company, but provided few details. Some wondered whether Streiff, a former building-materials company executive, would really shake things up.

Now, Streiff is making public the course he plans to chart—and major changes are in the air. On Sept. 4, Airbus announced that Chief Operating Officer Charles Champion, the executive who has overseen the troubled A380 megaplane, was being removed from his post. The company says Champion will remain as a "special adviser" to Streiff, while Mario Heinen, who has run Airbus's A320 narrow-body aircraft program, will take over the A380. The big plane, originally scheduled for launch last spring, has fallen a year behind schedule because of assembly-line problems related to cabin wiring (see BusinessWeek.com, 6/14/06, "Airbus Eats Humble Pie at Farnborough").

It's unlikely that Champion's ouster will bring immediate changes to the A380 program, which is now in the home stretch before its planned entry into service early next year. Indeed, he was sacked on the same day that one of Airbus's test-model A380s carried 474 company employees on a seven-hour trial flight. It's not even clear that Champion was any more to blame for the A380's woes than other top Airbus execs.

TOO MUCH, TOO SOON? But Streiff's decision is a powerful signal of change at Airbus. Removal of a veteran like Champion would have been unthinkable under the company's longtime former CEO, Noël Forgeard, who placed a big premium on loyalty (see BusinessWeek.com, 6/30/06, "'Major Screwup' at Airbus").

Until Streiff's arrival, nearly everyone in Airbus' top management had spent decades with the company. Many, like Forgeard, were protégés of the late Jean-Luc Lagardère, a legendary figure in French aerospace. Streiff "wants to break with the past and stamp his authority on the organization," says Zafar Khan, a London-based aerospace analyst with SG Securities. "There will be no more sacred cows."

Some Airbus-watchers warn that too much change, too quickly, could have devastating effects. Doug McVitie, a French-based aerospace analyst who previously worked at Airbus, calls the COO's ouster "self-defeating and spiteful," saying Champion knows more about the A380 program than anyone else. Others point out, though, that Airbus will still have the benefit of Champion's insight because of his role as adviser to Streiff.

THE FIRST HUNDRED DAYS. The challenges facing the A380 were underscored anew on Sept. 5 when Lufthansa confirmed that it won't receive the first of its expected 15 megaplane deliveries until the summer of 2008, about six months later than previously estimated. The first A380 is to be delivered at the end of this year to Singapore Airlines.

What else could Streiff have hidden in his flight bag? In recent days, he has announced a freeze on hiring—although that will have little impact, since the 57,000-person workforce was bound to shrink anyway as development of the A380 winds down. But bigger changes could be in store at the end of September, when the CEO has promised a 100-day progress report. Clearly, this is one flight plan worth watching.


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