Late Start has Perks for Airbus

July 2, 2007
Boeing rival to learn from any 787 miscues

Jul. 1--TOULOUSE, France -- Nobody will watch the debut this month of Boeing's 787 Dreamliner with greater interest than the 600 Airbus engineers here working around the clock to design a rival midsize jet.

The Airbus workers will be waiting for the production miscues that are inevitable in an aircraft as groundbreaking as the Dreamliner, made largely of composite materials. And they will try to steer their new plane clear of similar pitfalls when it rolls out in 2012.

That's one perk of being late, very late, to market, Airbus officials say.

Because of earlier strategic and design mistakes, Airbus' answer to the hot-selling Dreamliner, the A350 XWB, trails its counterpart by five years, a long lag time for an industry in which competing models usually debut within a year or two of each other.

Boeing has grabbed the early sales lead, racking up about 500 more orders for the 787 than Airbus has garnered for the A350. But officials at Airbus think their aircraft will be technically superior, in part because they will watch and learn from Boeing and take advantage of technological advances.

"Five years is a lot [of time], but it's a very useful lot," said Alan Pardoe, director of product marketing for the A350 and other long-range Airbus aircraft. "We've got five years more of materials, technology, development and research. Plus, we've got the airline endorsement of what Boeing is doing with the airplane to guide us."

Even so, Airbus knows that in other ways, such as potential loss of sales, time isn't on its side.

That's why Airbus is trying to shave 30 percent to 40 percent off the development time for its new jet while it attempts a major corporate restructuring that will shed 10,000 jobs and six plants across Europe.

The next few months could determine whether Airbus succeeds or falls further behind Chicago-based Boeing in their rivalry for the lucrative market for long-range jets.

Airbus must navigate tricky issues of nationalism and labor as it spins off three factories this month in joint ventures that may include foreign investors, while seeking buyers for three other plants. Three of the plants on the chopping block are in France, two in Germany and one in England, feeding concerns among French workers that they will lose clout and jobs to their German counterparts.

Then there always is the threat that labor unrest could paralyze Airbus, although the company's unions are divided on the restructuring plan, analysts say. Labor leaders are due to present their counterproposal for streamlining operations in early July.

"It sounds like they've got some potential problems here, some real tough decisions to make," said Paul Nisbet, aerospace analyst with Newport, R.I.-based JSA Research Inc

The European aerospace giant has strong motivation to meet its A350 deadlines, since it is spending about $15 billion to develop the new plane at a time when it is losing money. It won't begin to recoup its investment until the first aircraft are delivered in 2013.

Airbus also is trying to reclaim its reputation for top-flight engineering, which was tarnished with the embarrassing glitch that delayed production of its flagship, the double-decker A380 jet, by two years.

"The A380 is on track," said John Leahy, Airbus' chief operating officer and top salesman. "The first airplane will be delivered in October, and we're taking that production rate up to nearly 50 [planes] per year. We haven't forgotten how to build airplanes, much as the people in Seattle would like you to believe." While Boeing is headquartered in Chicago, its major facilities are on the West Coast.

Indeed, on a late June morning, the A380 factory in Toulouse was buzzing with workers and filled with five giant birds in various stages of assembly. Their components, completed in factories across Europe, are flown here in a specially-made bulbous jet called the Beluga. It takes workers just five days to snap the pieces together to form the main structure of the double-decker planes.

Airbus has guaranteed Qatar Airways, the largest customer for the A350, with 80 of the jets on order, that its planes will be delivered on time, said Akbar al Baker, the carrier's chief executive.

"I'm sure they've learned the lesson from their current saga of the Airbus A380," al Baker said in an interview at the Paris Air Show last month. "If it's a second airplane that they don't deliver on time, it will severely dent the reputation of Airbus."

Airbus also has brought into the A350 program the corps of engineers that crafted the A380 and untangled the wiring issues that triggered its delays. One of them is Phillippe Launay, who heads industrial development for the A350.

The engineering team intends to borrow the A380's technical breakthroughs -- its cockpit and large, light-weight wings, for example -- while learning from its painful production breakdown, Launay said. Wiring on the first A380s to be assembled didn't fit into electrical harnesses because French and German engineers working on different components of the aircraft had used different versions of the same design software.

"We'll use one 3-D software, fully synchronized, daily synchronized," Launay said.

Airbus intends to speed the plane's development by about 18 months by using a new process that keeps engineers, both in-house and at suppliers, working in tandem, the company said. Advances in computer simulation also mean they will have to do far less testing of aerodynamics in wind tunnels, a time-consuming process, Pardoe said.

The company also thinks that constructing the A350's composite fuselage in four giant panels, rather than the one single barrel used by Boeing's 787, ultimately will give it a manufacturing edge, even though that design has been questioned by a key buyer, Steven Udvar-Hazy, CEO of International Lease Finance Corp.

"Our guys are adamant that this is a good way and potentially a better way in terms of industrial efficiency and repeatability," Pardoe said.

Airbus officials also see their restructuring plan, known as Power 8, as a crucial component to delivering the new plane to customers on budget and on time. Leahy said many of the 10,000 jobs to be cut will come by trimming an overgrown bureaucracy.

"We're essentially matching Boeing in market share, matching Boeing in price," he said. "We have to match Boeing in cost."

Even so, worker morale at the Airbus plants has suffered amid the uncertainty, union leaders say. Although the initial layoffs are aimed at white-collar workers, those on the assembly lines fear their jobs could be next, particularly if their plants are spun off to foreign owners. Among the companies said to be mulling such investments include key Boeing airframe suppliers Spirit AeroSystems Holdings Inc., based in Kansas, and Vought Aircraft Industries Inc., based in South Carolina.

"If there's a financial or industry downturn, that's when the jobs will go overseas," said Xavier Petrachi, the Airbus representative at the Confederation Generale du Travail, a powerful French union representing engineers at the aerospace company.

"Management says there won't be any layoffs, and we believe them. We've been fighting very hard against [layoffs]," added Julien Talavan, the Airbus representative for Force Ouviere, the union representing its factory line workers.

But if the new factory owners or investors were to cut jobs, "it would be a social catastrophe and revolution," Talavan cautioned.

However, Airbus' cause could be aided by new French President Nicolas Sarkozy, who is viewed as pro-business and has vowed to make French companies more competitive in the international arena, said John Strickland, director of JLS Consulting Ltd., a London-based aviation consultancy.

"It's never a good time to have pain," said Strickland. "But it's better to have to deal with these tough problems now, a good number of years ahead of the aircraft being rolled out of the factory."

Graphic: Competing aircraft

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