State of the Airlines

Thursday, October 12, 2006

Politics Complicate the Future at Airbus

Its clear now that politics are going to play a huge role in any corrective action taken by Airbus. As the French and Germans prepare to meet today its plainer than ever. Rumors have surfaced that Germany, yes...the country, is considering buying a stake in Airbus parent EADS in an attempt to guarantee a hand in the decisions regarding Airbus. This comes in the face of other rumors that five German based Airbus facilities could be sold off. Meanwhile, the new head honcho at Airbus, Louis Gallois, is trying to assure everyone that everything will be handled fairly in terms of national interest. Finally EADS tells us to not expect any decisions on restructuring at Airbus for the next few months. That which puts us into 2007 before we'll hear how Airbus plans to pull out of this A380 induced nose-dive. Sounds like great politics but poor business strategy to me. Airbus needs to start making decisions now now now.
The press is drawing comparisons between Airbus' current dilemma and the problems that faced Boeing in the mid to late 90's. Its a fair comparison. The difference is that Boeing was and is a business first and a major national manufacturer a distant second. Boeing was able to enact its recovery plans without far less worry for which countries were involved (though political interests and alliance did work in the background). The unprecedented level of multi-national outsourcing on the 777 and the upcoming 787 are evidence of that. Generally speaking, governments are not good at being successful businesses. The government interests in EADS and Airbus need to quit meddling and let Airbus be a business.

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