Airbus Struggles to Turn Page on Crisis Year

Airbus, poised to fall behind U.S. rival Boeing Co. in orders for the first time in six years, must be wishing 2006 was already history.


EADS co-CEO Louis Gallois, who also became Airbus chief executive in October, warned at the time of "painful" job cuts as Airbus seeks to save cash by rethinking its sprawling production lines - which traditionally split final assembly of each plane between France and Germany.

Airbus has still given no indication of where the A350 will be built. With the French and German governments already bristling over likely job cuts, the French presidential election in April could complicate Gallois' pledge to finalize the shake-up early in the year.

Forgeard's July ouster revived Franco-German cooperation within EADS but did not remove tensions inherent in the company's split structure.

Gallois, the new French co-chief executive, has said he sees little likelihood of changes to the management setup, despite the frustrations felt by both CEOs, who would "prefer to be alone." Later the same day, German co-chief executive Tom Enders predicted that EADS shareholders would eventually choose a single boss.

Airbus cannot afford any more of the infighting that produced the A380 catastrophe by undermining coordination between facilities in Toulouse and Hamburg, Germany.

Even in the market for smaller jets, which it still narrowly leads, Airbus has set itself a serious challenge: increasing production of single-aisle A320 planes by 20 percent in two years to meet delivery commitments and avoid more compensation payments to disgruntled customers.

The best news Airbus can hope for in 2007 - besides a successful A320 ramp-up, internal harmony and restraint from politicians as the company restructures - could be a slip by its Chicago-based rival.

Boeing warned in July that the 787 was facing weight problems and supplier delays but insisted the program was on budget. Since then, the company has announced $635 million in additional spending to pare the excess weight while - so far - maintaining its mid-2008 schedule for entry into service, with the first flight promised next year.

Boeing Commercial Airplanes chief executive Scott Carson admonished workers to "stay humble" about the company's newfound leadership, in a recent interview with an internal company magazine.

"The risk we face is thinking we are doing well and can relax," he said.


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