Paris Air Show

Gallois: 2010 will be a difficult year, but EADS confronts crises head on

 - June 14, 2009, 3:32 AM

When EADS chief executive Louis Gallois briefed the world’s press just before the show he was taking to the podium against a backdrop of confusion over what caused the loss of an Air France Airbus A330 on June 1. “Our thoughts are with the families of the victims of AF447,” he began. “Even if the airshow is darkened by the accident, I think we have a great show ahead of us. Perhaps the global crisis is bringing everyone to Le Bourget, because it’s going to be busy.

“In 2009 the impact [of the downturn] will be limited, and we’re on track. [But] 2010 and perhaps 2011 will be more critical, and will depend on the traffic evolution, which is still disappointing,” said Gallois. Just how bad 2010 will be is still very unclear, he added. “We have no visibility.”

“To fight the crisis, what are we doing?” he asked. “First we have to support our customers. We were anticipating delivering 40 aircraft a month, now the target is 34. We were expecting to deliver 10 A380s a month, but now we are frozen at 8.5–so we are reducing our production rate by 15 to 20 percent.”

Painful and complex though this may be, Gallois admitted that the main challenge was to “be ready to increase production when it’s needed–and it will be needed. We have to be careful in how we protect our manpower, and we have to protect our cash. We have ?8.5 billion–which is our best protection against the crisis. If the crisis becomes deeper in 2010 we will demonstrate our company is robust, resilient and able to act.”

The company will need resilience, too, as its customers face difficulties financing Airbus aircraft commitments at the same time as development continues on the [Airbus] A350XWB airliner and [Airbus Military] A400M military transport, which the EADS boss admitted is eating through ?100 million a month, with around 6,000 employees dedicated to the much-delayed program.

With the A350XWB, he said Airbus had requested launch aid for around one third of the development cost, but that the timing was uncertain and subject to negotiations with the UK, French, German and Spanish governments. Ministers from these nations are due to meet here this afternoon.

A smoldering issue is the World Trade Organization investigation into such subsidies. “We don’t plead guilty,” said Gallois, “but we are not ashamed of receiving loans either.”