EADS Media Day
We attended the EADS Media Day that is held in advance of the two major air shows, Paris and Farnborough.
- EADS CEO Louis Gallois said EADS, one year after implementation of the Power8 restructuring program began, has made progress in becoming a more integrated company with transparent reporting lines. Airbus CEO Thomas Enders acknowledged, however, that there are still nationalistic tendancies between French and German employees and divisions that need to be overcome.
- Enders said that 26% of the A350 supplier sourcing has now been assigned to the US, compared with 4% for the A320 family. This represents a major shift toward diversifying from European sourcing and more of the remaining 74% of the A350 supply chain that has yet to be sourced will be outside Europe.
- Gallois, Enders and EADS North America COO John Young (no relation to the Defense Department’s chief procurement officer of the same name) are confident Northrop Grumman will win the recompete for the tanker. Collectively, they said only a few of the seven items of the protest filed by Boeing are centered on Northrop’s KC-30 bid, which is based on the Airbus A330-200; the other items had to do with the USAF process and analysis. The EADS officials believe that Boeing won’t offer a plane different than the KC-767AT that lost the competition. Young opined that the Air Force recompete decision could come as late as March instead of the end of the year, simply because the timeline outlined by the Defense Department is probably too aggressive.
- Gallois declined to predict dates when EADS and Airbus will meet certain Power8 milestones. “We have been too straight-forward with dates [later missed],” Gallois said. “I admire Boeing for never giving dates. They never give any information!” adding that the last remark was a joke.
- Gallois repeated the previously disclosed goal that EADS wants to evenly divide revenues between Airbus and defense-related business. Airbus currently comprises between 60%-65% of the revenues, down from 80% only a few years ago.
- Although Gallois dismissed the premise that Northrop may lose the tanker recompete, he said that would not lessen the EADS desire to broaden its “footprint” in the US as a means of reducing exposure to the weak US dollar to the Euro.
- Further justifying the push to diversify from Europe, Galloius said that 75% of the aerospace engineers are located outside Europe; and that access [to sales] in certain markets supports diversification, similar to Boeing’s production and resesearch model.
- Enders, however, said it will be years before the EADS/Airbus employee head count drops below 50% in Europe–though he hastily added that this figure is not the goal. The European head count currently represents 95% of the company’s employees.
- Enders acknowledged that Airbus is “fighting” and “struggling” with the transition from Wave 1 to Wave 2 for the A380. Wave 1 is the first two dozen or so A380s that have to be hand-wired following the production snafus that resulted in the bulk of the two year program delay. Wave 2 is the automated industrialization plan to install wiring. Slow progress recently resulted in an additonal delay of three to five months.
More reporting from the Farnborough Air Show will continue throughout the week.