When an Airbus salesman admits to being a little "embarrassed" about having so much market share, something radical has changed in the world. And as the world's press assembled in Toulouse in May it was clear that it had.
It hardly needed pointing out that Airbus has drawn level with Boeing on new orders. But commercial vice-president Paul Mason even admitted to being slightly uncomfortable with the figures for the first four months of the year which give Airbus a 69%share of new business. He hastened to add that Toulouse is only looking for 50% - not less, but not more either.
As with anyone achieving a life-time's ambition the first question is about what comes next? In this case, the task is all too clear: to hit record production levels, while keeping a weather eye out for the downturn, and transforming from a partnership structure to the fabled Single Corporate Entity (SCE). There is also the matter of completing the range, with its most ambitious programme to date - the A3XX.
Airbus financial controller Ian Massey concedes that there is less anxiety about the order battle with Boeing and some signs of a much-needed "edging up" in price. But, despite pressure from shareholders, he believes that the market dynamics will prevent Airbus from being too choosy about its deals. Even in a duopoly, he argues, each deal lost has a knock-on effect for the next battle.
The new aim is to avoid the usual rollercoaster of boom-to-bust, managing production rates in a "sensible and profitable way" says Massey. The current plan is to keep the production ramp-up going this year and next, before reaching a steady state of around 350 aircraft deliveries a year - which Airbus reckons is about half the underlying market. It reckons it will meet with Boeing coming down as demand begins to subside. However, markets have shown no signs of flattening. "At the moment we have customers screaming at us for deliveries. We've persuaded some that it may be better for us and them that they don't take deliveries," says Massey. Despite the pressure, he is still banking on on a levelling out production rates in 2002, but concedes that they would have to rise again if customers take up all their current options.
Massey is equally keen to keep up the good work on cost, which has seen significant improvements in raising productivity and reducing lead times over the past five years. But he suggests that the next leap forward will be dependent on a change in the Airbus structure, creating a standalone company with full management control of costs and investment. The formation of an SCE was due this year, but has become entangled in Europe's wider aerospace restructuring. The main Airbus partners - Aerospatiale, British Aerospace and DaimlerChrysler - have each been through their own mergers and acquisitions, so valuation of Airbus assets for the SCE has had to wait. Opinion in Toulouse is that agreement is probably still a year away.
The SCE has implications for the A3XXas it still awaits launch. Although Airbus could technically raise the necessary funding in its present guise, management admit that in reality the programme's future is linked to the restructuring and that the two decisions will have to be taken together .
Source: Airline Business
