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Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 3/97 AFTER A GOOD 1996, AIRBUS FACES NEW CHALLENGES by Norbert Burgner The European Airbus consortium has further secured its market position in relation to Boeing. In 1996, Airbus Industrie logged 326 orders from 31 customers, an order volume worth $23,6 billion. Also, the European consortium points out that - unlike the competitor from Seattle - AI only lists the orders for which a contract has been signed, a downpayment was made and, if necessary, the appropriate agreement of the respective government has been obtained. Using the competitor's scale, which also includes intended orders, the number of orders that AI logged in 1996 increases to 498 worth $34,4 billion. Furthermore, the Toulouse based consortium's careful management of the order log in the past, economically difficult, years has led to only 25 cancellations in the last business year. This yielded a net order volume of 301 aircraft. Since more orders were logged than aircraft delivered in 1996, the world's second largest aircraft manufacturer's total order volume increased to 753 aircraft, worth $58,4 billion. According to Airbus, last year's 498 orders and commitments are equal to a share of 42 percent of the market for airliner with more than 100 seats. 112 of these orders are for large aircraft such as the A330/340, being equivalent to 57 percent of all sales in this category. 366 entries in the order book were made for the A319/320/321 family. Airbus delivered 126 aircraft in 1996, among them 38 A330/340, 16 A300/310 as well as 72 A319/320/321, turning over $8,8 billion. The decrease in turnover, as compared to 1995 ($9,6 billion), in spite of an almost identical number of aircraft sold (124 in 1995), is supposedly due to the relatively smaller number of large aircraft sold. Due to the strong upward trend, AI will increase the production by 45 percent in 1997 (183 aircraft) and expects a further increase to 220 units of all models in 1998. Since its foundation in 1970, Airbus Industrie has sold 2236 aircraft, worth $137,6 billion. In order to be able to take a similar stock another 27 years from now, the consortium must now point the way ahead. Experts and politics agree: the restructuring of the present community of economical interest with a joint sales and marketing organization in Toulouse into an integrated company with a corporate structure is inevitable if the European aircraft manufacture wants to stay competitive in the international airliner market. The four Airbus partners Aérospatiale (37,9 percent), Dasa (37,9 percent), British Aerospace (22 percent), and Casa (4,2 percent) have made a first step by signing a letter of intent in January. Now, they need to put action into words. German Minister for Economic Affairs, Günter Rexrodt, urged the partners not to come to a standstill halfway through the process. The projected schedule (restructuring until 1999) should be adhered to in any case because of the fusioning process in the USA. Otherwise, the consortium will loose its competitiveness, generating further disadvantages for the European aerospace industry. Rexrodt continues, saying that it is imperative that all four partners contribute their main production plants to the new company: "The German and European taxpayers, who have made a significant contribution to the success of Airbus, can expect that the new challenge will be mastered. The restructuring of Airbus Industrie must prove that a European company can be shaped for the global competition". However, it's the individual contribution of the four partners that is a problem. While British Aerospace and Dasa call for a full integration, Aérospatiale and Casa are tending towards partial solutions. One reason might be the decipherment of the under governmental direction operating companies, which may become necessary in case of a further unification of the partners. Also, Aérospatiale must accomplish the prescribed merger with Dassault at the same time. Just this alone could prove a hindrance for Airbus's passage in the coming months. Still, the Airbus corporation must become a reality. The development and production of a European Super Jumbo based on Airbus's current organizational and financial structure will, if at all, only be possible with the utmost, maybe even ruinous, efforts. There is a high probability that this endeavour would immobilize the European aircraft manufacturer entirely. Due to this fact it is vital to take other partners on board. Airbus plans to farm out up to 40 percent of the A3XX program shares. Insiders expect that a US partner will be found this year. Lockheed Martin and Northrop Grumman are being considered. But, whomever is to take responsibility for 40 percent of the estimated development costs of $10 billion (or more), needs more than the prospects of a risky project, a profitable realization of which being questionable and having generated only moderate interest from the airlines so far. A confidence-building long-term perspective would be helpful in this situation. This, however, requires a confidence-building corporate structure. Once this organizational requirement is fulfilled and all economical, political, as well as, tax obstacles on the way to an Airbus corporation are taken care of, the question about Dasa's future right to exist may arise. The future value of the Daimler-Benz subsidiary might be at stake once Dasa has contributed its Airbus production shares to the new corporation, such giving up the core of its aerospace business. From page 31 of FLUG REVUE 3/97 Home | Update | Latest Issue | Gallery | FR Profile | Datafiles | FR 3/97 Copyright 1997 by Motor-Presse Stuttgart. All rights reserved. Last updated February 13, 1997