May 22, 2019, © Leeham News, Toulouse: The A380 is a success for Airbus despite being forced by the lack of market demand to decide to close the program in 2021, well short of break-even sales.
Guillaume Faury, who took over as CEO in April from retiring Tom Enders, said at the Airbus Innovation Days pre-Paris Air Show briefing yesterday, that the A380 led the path to the successful development and production of the successful A350 and the transformation of Airbus into it is today.
Enders in February decided to end the program, which struggled for years to find buyers for the aircraft in an industry where airline preference shifted from bigger to smaller airplanes.
Faury, however, did not answer a question from Reuters’ aerospace reporter Tim Hepher that if Airbus considers the A380 a success why it refuses to repay German launch aid of more than $600m.
The A380 received launch aid from the Airbus member states of France, Germany and Spain when the program was launched in 2000. This aid, and aid and tax breaks for all other Airbus commercial jets, were the subject of a massive trade complaint by Boeing and the US Trade Representative in 2004 with the World Trade Organization.
Boeing claimed unfair subsidies harmed its sales. The WTO broadly in favor of the USTR (Boeing) on many of its complaints but also threw out some and declared others moot.
The USTR complained Airbus and the European Union failed to cure the illegal subsidies on the A380 and A350, the only remaining complaints when Enders decided to terminate the A380 program when the last of the orders were delivered in 2021.
Airbus took the position that under previous WTO rulings involving the A340, once a program is shut down, launch aid doesn’t have to be terminated.
Faury did not answer Hepher’s question about the outstanding German launch aid, which has become a political issue in elections.
The A380 was an industrial if not a sales success because in 2006, problems in final assembly exposed the cultural and industrial mismatch between the French and German plants where the A380 is produced and assembled.
The two plants used different versions of a program that created the miles and miles of wiring for the A380. When personnel tried to connect the wiring in final assembly, it fell short—literally—by a few inches.
Wiring for the first several A380s had to be removed and reinstalled, a process that delayed the entry into service by nearly 18 months.
The industrial goof cost Noel Forgeard, then CEO of Airbus parent EADS, his job. Gustav Humbert, CEO of Airbus, resigned. Charles Champion, head of the A380 program and heir apparent to Humbert, was reassigned. French prosecutors filed insider trading charges against several Airbus executives, alleging they sold stock before making the A380 delay and industrial problem public. The execs were never convicted.
Enders was named CEO of Airbus. He restructured the French and German divisions eliminate, or at least reduce, the mismatches.
Lessons learned from the A380 debacle were applied to the A350 production, then in its infancy. Production was smooth. Processes emerging from the A350 program have been applied to Airbus.
There have been nearly 900 sales of the A350.
This transformation is what Faury meant when he said the A380 is a success for Airbus.
But Airbus’ apparent refusal to repay the launch aid led the USTR (Boeing) and the Trump Administration for WTO authority to impose $11bn in tariffs, mostly on European goods unrelated to aerospace. This is before the WTO now.