Paris Air Show

Gallois claims full recovery for Airbus

 - June 19, 2007, 11:11 AM

Airbus chief executive Louis Gallois declared yesterday that the European consortium “is back, fully back,” from an odyssey through one of the most trying two years in its history. Any such pronouncement made a day early would no doubt have elicited a hearty belly laugh or two within the Boeing chalet. But after yesterday’s blizzard of order announcements, Gallois and his new management team assembled for yesterday’s main address to the press with an air of confidence not seen since the A380 began showing signs of serious design problems.

Monday’s firm order count of 219 on its own looked impressive, but Gallois took particular delight in new business for the A350, a program that has certainly endured its share of struggles but that, according to the Airbus boss, is well on its way to full definition. “I will send my friend Jim McNerney a brochure of the XWB, because he doesn’t seem to know it as well as our customers,” quipped Gallois in a transparent rebuke of the Boeing CEO’s references to the program’s lack of design maturity.

Nevertheless, he admitted to the fact that the airlines would rather have a choice of a second engine and that negotiations continue with General Electric, notwithstanding reports that the company will not offer an engine for the largest A350–the A350 XWB 10000. “We are happy to work with Rolls, but we know airlines want another choice,” said Gallois. “For that we are discussing [options] with other engine makers, including GE, but have not reached an agreement so far.”

Risk Sharing
On the business of industrial arrangements, Airbus chief operating officer Fabrice Bregier said he expected to sign most of the A350’s risk-sharing partners this summer. Airbus hopes Italy’s Finmeccanica, for one, will become an important partner on the program. “They cooperate with us on ATR and the A380, and we want them on board for the A350,” he said. “We have not achieved an agreement, but we know we will have to do that.”

Airbus expects to outsource 53 percent of the A350 to outside companies, a plan that follows with Gallois’ desire to “be more and more global.”

“I am thinking of the Russians, I am thinking of the Chinese and I am thinking of the Indians,” said Gallois.

Perhaps further expansion into lower cost markets will help overcome a disadvantage Airbus suffers from the weakness of the U.S. dollar, apparently a major source of concern for Gallois, who referred to the 1.35 exchange rate as a benchmark above which the Power8 restructuring program might have to undergo some modification. “We have no scenario with the U.S. dollar weaker than 1.35…but we will react if necessary,” he said.

With Monday’s firm orders for 219 airplanes, Airbus’ ledger edged above the 400 plateau, well on pace to break the projected annual mark of 600, Airbus COO for customers John Leahy cited yesterday. Airbus continues to lament the lack of a Japanese presence, although he suggested that the A380 might well represent Airbus’ entry into the market.

Gallois didn’t sound quite as encouraged about the chances of Japanese industrial ties.  “For the time being, we don’t feel that the Japanese industry is very motivated to cooperate with us, and we regret it,” said Gallois.