Airbus

2008/9 Schools Wikipedia Selection. Related subjects: Air & Sea transport

Airbus S.A.S.
Type	Subsidiary
Founded	1970 (Airbus Industrie) 2001 (Airbus S.A.S.)
Headquarters	Toulouse, France
Key people	Thomas Enders, CEO Hans Peter Ring, CFO John Leahy, Sales Director Fabrice Brégier, COO
Industry	Aerospace
Products	Commercial airliners ( list)
Revenue	▲ €23.5 billion (2005)
Employees	55,000-57,000
Parent	EADS
Subsidiaries	Airbus Military
Website	www.airbus.com

Airbus S.A.S. (pronounced /ɛ(ɹ)bʌs/ in English, /ɛʁbys/ in French, and /ˈɛːɐbʊs/ in German) is an aircraft manufacturing subsidiary of EADS, a European aerospace concern. Based in Toulouse, France and with significant activity across Europe, the company produces around half of the world's jet airliners.

Airbus began as a consortium of aerospace manufacturers. Consolidation of European defence and aerospace companies around the turn of the century allowed the establishment of a simplified joint stock company in 2001, owned by EADS (80%) and BAE Systems (20%). After a protracted sale process BAE sold its shareholding to EADS on 13 October 2006.

Airbus employs around 57,000 people at sixteen sites in four European countries: Germany, France, the United Kingdom, and Spain. Final assembly production is at Toulouse (France) and Hamburg (Germany). Airbus has subsidiaries in the United States, Japan and China.

History

Airbus Industrie began as a consortium of European aviation firms to compete with American companies such as Boeing, McDonnell Douglas, and Lockheed.

While many European aircraft were innovative, even the most successful had small production runs. In 1991, Jean Pierson, then CEO and Managing Director of Airbus Industrie, described a number of factors which explained the dominant position of American aircraft manufacturers: the land mass of the United States made air transport the favoured mode of travel; a 1942 Anglo-American agreement entrusted transport aircraft production to the US; and World War II had left America with "a profitable, vigorous, powerful and structured aeronautical industry."

In the mid-1960s, tentative negotiations commenced regarding a European collaborative approach. At the 1965 Paris Air Show major European airlines informally discussed their requirements for a new short- to medium-range "airbus". European aircraft manufacturers were aware of the risks of such a development and began to accept, along with their governments, that collaboration was required to develop such an aircraft and to compete with the US manufacturers. The same year Hawker Siddeley (at the urging of the UK government) teamed with Breguet and Nord to study airbus designs. The Hawker Siddeley/Breguet/Nord groups HBN 100 became the basis for the continuation of the project. By 1966 the partners were Sud Aviation (France), Arbeitsgemeinschaft Airbus, later Deutsche Airbus (Germany) and Hawker Siddeley (UK). A request for funding was made to the three governments in October 1966.

By early 1967 the " A300" label began to be applied and the proposal developed into a 320 seat, twin engined airliner. On 25 July 1967 the three governments agreed to proceed to the definition stage with the mission statement:

“

"For the purpose of strengthening European co-operation in the field of aviation technology and thereby promoting economic and technological progress in Europe, to take appropriate measures for the joint development and production of an airbus."

”

Shortly after the agreement, Roger Béteille was appointed technical director of the A300 project. Béteille developed a division of labour which would be the basis of Airbus' production for years to come: France would manufacture the cockpit, flight control and the lower centre section of the fuselage; Hawker Siddeley, whose Trident technology had impressed him, was to manufacture the wings; Germany should make the forward and rear fuselage sections, as well as the upper centre section; The Dutch would make the flaps and spoilers; finally Spain (yet to become a full partner) would make the horizontal tailplane. On 26 September 1967 the German, French and British governments signed a Memorandum of Understanding in London which allowed continued development studies. This also confirmed Sud Aviation as the "lead company", that France and the UK would each have a 37.5% workshare with Germany taking 25%, and that Rolls-Royce would manufacture the engines.

In the two years following this agreement, both the British and French governments expressed doubts about the project. The MoU had stated that 75 orders must be achieved by 31 July 1968. However lukewarm airline support for a 300 seat Airbus A300 lead to the partners submitting the A250 proposal (what became the A300B) for a 250 seat airliner powered by existing engines. This dramatically reduced development costs, as the Rolls-Royce RB207 represented a large proportion of those costs. The RB207 had also suffered difficulties, since Rolls-Royce was concentrating its efforts on the development of the related RB211 for the Lockheed L-1011. The French government threatened to withdraw from the project due to the concern over funding development of the Airbus A300, Concorde and the Dassault Mercure concurrently, but was persuaded otherwise. Having announced its concern at the A300B proposal in December 1968, and fearing it would not recoup its investment due to lack of sales, the British government announced its withdrawal on 10 April 1969. Germany took this opportunity to increase its share of the project to 50%. Given the participation by Hawker Siddeley up to that point, France and Germany were reluctant to take over its wing design. Thus the British company was allowed to continue as a privileged subcontractor. Hawker Siddeley invested GB£35 million in tooling and, requiring more capital, received a GB£35 million loan from the German government.

Formation of Airbus Industrie

Airbus Industrie was formally established as a Groupement d'Interet Economique (Economic Interest Group or GIE) on 18 December 1970. The name "Airbus" was taken from a non-proprietary term used by the airline industry in the 1960s to refer to a commercial aircraft of a certain size and range, for this term was acceptable to the French linguistically. Aerospatiale and Deutsche Airbus each took a 36.5% share of production work, Hawker Siddeley 20% and Fokker-VFW 7%. Each company would deliver its sections as fully equipped, ready-to-fly items. In October 1971 the Spanish company CASA acquired a 4.2% share of Airbus Industrie, with Aerospatiale and Deutsche Airbus reducing their stakes to 47.9%. In January 1979 British Aerospace, which had absorbed Hawker Siddeley in 1977, acquired a 20% share of Airbus Industrie. The majority shareholders reduced their shares to 37.9%, while CASA retained its 4.2%.

In 1972, the A300 made its maiden flight and the first production model, the A300B2 entered service in 1974. Initially the success of the consortium was poor but by 1979 there were 81 aircraft in service. It was the launch of the A320 in 1981 that guaranteed the status of Airbus as a major player in the aircraft market - the aircraft had over 400 orders before it first flew, compared to 15 for the A300 in 1972.

Transition to Airbus SAS

The retention of production and engineering assets by the partner companies in effect made Airbus Industrie a sales and marketing company. This arrangement led to inefficiencies due to the inherent conflicts of interest that the four partner companies faced; they were both GIE shareholders and subcontractors to the consortium. The companies collaborated on development of the Airbus range, but guarded the financial details of their own production activities and sought to maximise the transfer prices of their sub-assemblies.

In the early 1990s the then Airbus CEO Jean Pierson argued that the GIE should be abandoned and Airbus established as a conventional company. However, the difficulties of integrating and valuing the assets of four companies, as well as legal issues, delayed the initiative. In December 1998, when it was reported that British Aerospace and DASA were close to merging, Aérospatiale paralysed negotiations on the Airbus conversion; the French company feared the combined BAe/DASA, which would own 57.9% of Airbus, would dominate the company and it insisted on a 50/50 split. However, the issue was resolved in January 1999 when BAe abandoned talks with DASA in favour of merging with Marconi Electronic Systems to become BAE Systems. Then in 2000 three of the four partner companies ( DaimlerChrysler Aerospace, successor to Deutsche Airbus; Aérospatiale-Matra, successor to Sud-Aviation; and CASA) merged to form EADS, simplifying the process. EADS now owned Airbus France, Airbus Deutschland and Airbus España, and thus 80% of Airbus Industrie. BAE Systems and EADS transferred their production assets to the new company, Airbus SAS, in return for shareholdings in that company.

BAE sale and A380 controversy

On 6 April 2006 BBC News reported that BAE Systems was again selling its share, then "conservatively valued" at €3.5 billion (US$4.17 bn). The move was seen by many analysts as a move to make partnerships with U.S. firms more feasible, in both financial and political terms. BAE originally sought to agree a price with EADS through an informal process. However, due to the slow pace of negotiations and disagreements over price, BAE exercised its put option which saw investment bank Rothschild appointed to give an independent valuation.

In June 2006, Airbus became embroiled in a significant international controversy over its announcement of a further delay in the delivery of its A380. In the wake of the announcement, the value of associated stock plunged by up to a quarter in a matter of days, although it soon recovered somewhat. Allegations of insider trading on the part of Noël Forgeard, CEO of EADS, its majority corporate parent, promptly followed. The loss of associated value caused great concern on the part of BAE, The Independent describing a "furious row" between BAE and EADS, with BAE believing the announcement was designed to depress the value of its share. A French shareholder group filed a class action lawsuit against EADS in a Dutch court for failing to inform investors of the financial implications of the A380 delays while airlines to which deliveries were promised are expected to demand compensation. As a result, EADS chief Noël Forgeard and Airbus CEO Gustav Humbert announced their resignations on 2 July 2006. Forgeard's severance package is expected to include three years of salary plus the 2005 bonus; a total of at least €6 million, possibly topping €7 million.

On 2 July 2006 Rothschild valued BAE's stake at £1.9 billion (€2.75 billion), well below the expectation of BAE analysts and even EADS. On 5 July BAE appointed independent auditors to investigate how the value of its share of Airbus had fallen from the original estimates to the Rothschild valuation. They pushed back any potential sale until September at the earliest. On 6 September 2006 BAE agreed to sell its stake in Airbus to EADS for £1.87 billion (€2.75 billion, $3.53 billion), pending BAE shareholder approval. On 4 October shareholders voted in favour of the sale.

On 9 October 2006 Christian Streiff, Humbert's successor, resigned due to differences with parent company EADS over the amount of independence he would be granted in implementing his reorganization plan for Airbus. He will be succeeded by EADS co-CEO Louis Gallois. This brings Airbus under more direct control of its parent company.

Catia debacle

On 3 October 2006, Christian Streiff announced that the reason for delay of the Airbus A380 was the use of incompatible software used to design the aircraft. Primarily, the Toulouse assembly plant used the latest version 5 of Catia (made by Dassault), while the design centre at the Hamburg factory used an older incompatible version 4. Parts of the plane were also designed using Parametric Technology Corporation software. The responsibility for the problem was put on the top management for not placing a high enough priority on forcing the compatible software through all parts of the organization. The result was that the 530km of cables wiring throughout the aircraft has to be completely redesigned.

The cost of this debacle is expected to reach $6.1 billion over the next four years. Although none of the orders have been canceled, Airbus will have to pay millions in late-delivery penalties.

2007 restructuring

On 28 February 2007, CEO Louis Gallois announced the company's restructuring plans. Entitled Power⁸, the plan would see 10,000 jobs cut over four years; 4,300 in France, 3,700 in Germany, 1,600 in the UK and 400 in Spain. 5,000 of the 10,000 would be at sub contractors. Plants at Saint Nazaire, Varel and Laupheim face sell off or closure, while Meaulte, Nordenham and Filton are "open to investors". The announcements have resulted in Airbus unions in France planning to strike, with German Airbus workers possibly following. .

Civilian products

The Airbus product line started with the A300, the world's first twin-aisle, twin-engined aircraft. A shorter, re-winged, re-engined variant of the A300 is known as the A310. Building on its success, Airbus launched the A320 with its innovative fly-by-wire control system. The A320 has been, and continues to be, a great commercial success. The A318 and A319 are shorter derivatives with some of the latter under construction for the corporate biz-jet market ( Airbus Corporate Jet). A stretched version is known as the A321 and is proving competitive with later models of the Boeing 737.

The longer-range products, the twin-jet A330 and the four-engine A340, have efficient wings, enhanced by winglets. The Airbus A340-500 has an operating range of 16 700 kilometres (9000 nautical miles), the second longest range of any commercial jet after the Boeing 777-200LR (range of 17 446 km or 9420 nautical miles). The company is particularly proud of its use of fly-by-wire technologies and the common cockpit systems in use throughout the aircraft family, which make it much easier to train crew.

Airbus is studying a replacement for the A320 series, tentatively dubbed NSR, for "New Short-Range aircraft."

In July 2007, Airbus delivered its last A300 to FedEx, marking the end of the A300/A310 production line. Airbus intends to relocate Toulouse A320 final assembly activity to Hamburg, and A350/A380 production in the opposite direction as part of its Power8 organization plan begun under ex-CEO Christian Streiff.

Airbus supplied replacement parts and service for the Concorde until its retirement in 2003.

Product list and details (date information from Airbus)

Aircraft	Description	Seats	Max	Launch date	1st flight	1st delivery	Production to cease/ceased
A300	2 engine, twin aisle	228-254	361	May 1969	28 October 1972	May 1974 Air France	Production ceased March 27 2007
A310	2 engine, twin aisle, modified A300	187	279	July 1978	3 April 1982	December 1985 Air Algerie	Production ceased March 27 2007
A318	2 engine, single aisle, shortened 6.17 m from A320	107	117	April 1999	15 January 2002	October 2003 Air France
A319	2 engine, single aisle, shortened 3.77 m from A320	124	156	June 1993	25 August 1995	April 1996 Swissair
A320	2 engine, single aisle	150	180	March 1984	22 February 1987	March 1988 Air Inter
A321	2 engine, single aisle, lengthened 6.94 m from A320	185	220	November 1989	11 March 1993	January 1994 Lufthansa
A330	2 engine, twin aisle.	253-295	406-440	June 1987	2 November 1992	December 1993 Air Inter
A340	4 engine, twin aisle	239-380	420-440	June 1987	25 October 1991	January 1993 Air France
A350	2 engine, twin aisle	270-350		December 2006	2011 expected	mid-2013 TAM
A380	4 engine, double deck, twin aisle	555	853	2002	27 April 2005	15th October 2007 Singapore Airlines

Competition with Boeing

Airbus is in tight competition with Boeing every year for aircraft orders. Though both manufacturers have a broad product range in various segments from single-aisle to wide-body, their aircraft do not always compete head-to-head. Instead they respond with models a bit smaller or a bit bigger than the other in order to plug any holes in demand and achieve a better edge. The A380, for example, is designed to be a bit bigger than the 747. The A350 XWB competes with the high end of the 787 and the low end of the 777. The A320 is bigger than the 737-700 but smaller than the 737-800. The A321 is bigger than the 737-900 but smaller than the previous 757-200. Airlines see this as a benefit since they get a more complete product range from 100 seats to 500 seats than if both companies offered identical aircraft.

In recent years the Boeing 777 has outsold its Airbus counterparts, which include the A340 family as well as the A330-300. The smaller A330-200 competes with the 767, outselling its Boeing counterpart in recent years. The A380 is anticipated to further reduce sales of the Boeing 747, gaining Airbus a share of the market in very large aircraft, though frequent delays in the A380 program have caused several customers to consider the refreshed 747-8. Airbus has also proposed the A350 XWB to compete with the fast-selling Boeing 787, after being under great pressure from airlines to produce a competing model.

There are around 4,463 Airbus aircraft in service, with Airbus managing to win over 50 per cent of aircraft orders in recent years. Airbus products are still outnumbered 6 to 1 by in-service Boeings (there are over 5,000 Boeing 737s alone in service). This however is indicative of historical success - Airbus made a late entry into the modern jet airliner market (1972 vs. 1958 for Boeing).

Airbus won a greater share of orders in 2003, 2004. It also delivered more aircraft in 2003, 2004, 2005 & 2006.

In 2005, Airbus made a claim to victory again with 1111 (1055 net), compared to 1029 (net of 1002) for Boeing However, Boeing won 55% of 2005 orders by value, due to that firm winning several important widebody sales at the expense of Airbus.

In 2006 Boeing won more orders by both measures. Airbus regained parity as of mid-2007.

Orders and deliveries

Orders

	2007	2006	2005	2004	2003	2002	2001	2000	1999	1998	1997	1996	1995	1994	1993	1992	1991	1990	1989
Airbus	1341	824	1111	370	284	300	375	520	476	556	460	326	106	125	38	136	101	404	421
Boeing	1413	1044	1002	272	239	251	314	588	355	606	543	708	441	125	236	266	273	533	716
	Sources: 2007: http://www.nytimes.com/2008/01/04/business/04boeing.html http://www.airbus.com/en/presscentre/pressreleases/pressreleases_items/08_01_16_airbus_2007_results.html

Deliveries

	2007	2006	2005	2004	2003	2002	2001	2000	1999	1998	1997	1996	1995	1994	1993	1992	1991	1990	1989
Airbus	453	434	378	320	305	303	325	311	294	229	182	126	124	123	138	157	163	95	105
Boeing	441	398	290	285	281	381	527	491	620	563	375	271	256	312	409	572	606	527	402

Subsidies

Boeing has continually protested over "launch aid" and other forms of government aid to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks.

In July 2004 Harry Stonecipher (then-Boeing CEO) accused Airbus of abusing a 1992 bilateral EU-US agreement providing for disciplines for large civil aircraft support from governments. Airbus is given reimbursable launch investment (RLI, called "launch aid" by the US) from European governments with the money being paid back with interest, plus indefinite royalties, but only if the aircraft is a commercial success. Airbus contends that this system is fully compliant with the 1992 agreement and WTO rules. The agreement allows up to 33 per cent of the programme cost to be met through government loans which are to be fully repaid within 17 years with interest and royalties. These loans are held at a minimum interest rate equal to the cost of government borrowing plus 0.25%, which would be below market rates available to Airbus without government support. Airbus claims that since the signature of the EU-U.S. Agreement in 1992, it has repaid European governments more than U.S.$6.7 billion and that this is 40% more than it has received.

Airbus argues that the pork barrel military contracts awarded to Boeing (the second largest U.S. defence contractor) are in effect a form of subsidy (see the Boeing KC-767 military contracting controversy). The significant U.S. government support of technology development via NASA also provides significant support to Boeing, as do the large tax breaks offered to Boeing, which some people claim are in violation of the 1992 agreement and WTO rules. In its recent products such as the 787, Boeing has also been offered direct financial support from local and state governments. However it has been argued that in U.S. government support of technology development, anyone can benefit from the results; even Airbus can benefit from them.

In January 2005 the European Union and United States trade representatives, Peter Mandelson and Robert Zoellick (since replaced by Rob Portman) respectively, agreed to talks aimed at resolving the increasing tensions. These talks were not successful with the dispute becoming more acrimonious rather than approaching a settlement.

World Trade Organization litigation

On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing.

Portman (from the USA) and Mandelson (from the EU) issued a joint statement stating: "We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues. We have worked together well so far, and intend to continue to do so."

Tensions increased by the support for the Airbus A380 have erupted into a potential trade war due to the upcoming launch of the Airbus A350. Airbus would ideally like the A350 programme to be launched with the help of state loans covering a third of the development costs although it has stated it will launch without these loans if required. The A350 will compete with Boeing's most successful project in recent years, the 787 Dreamliner.

EU trade officials are questioning the funding provided by NASA, the Department of Defense (in particular in the form of R&D contracts that benefit Boeing) as well as funding from US states (in particular the State of Washington, the State of Kansas and the State of Illinois) for the launch of Boeing aircraft, in particular the 787.

Military products

In January 1999 Airbus established a separate company, Airbus Military S.A.S., to undertake development and production of a turboprop-powered tactical transport aircraft (the Airbus Military A400M.) The A400M is being developed by several NATO members, Belgium, France, Germany, Luxembourg, Spain, Turkey, and the UK, as an alternative to the C-130 Hercules. Expansion in the military aircraft market will reduce, but not negate, Airbus' exposure to the effects of cyclical downturns in civil aviation.

International manufacturing presence

The three final assembly lines of Airbus are in Toulouse (France) (two assembly lines) and Hamburg (Germany) (one assembly line). A fourth final assembly line, for the Airbus A400M, is under construction in Seville (Spain). It is estimated that this new assembly line will be operational by October 2006.

Airbus, however, has a number of other plants in different European locations, reflecting its foundation as a consortium. An original solution to the problem of moving aircraft parts between the different factories and the assembly plants is the use of " Beluga" specially enlarged jets, capable of carrying entire sections of fuselage of Airbus aircraft. This solution has also been investigated by Boeing, who retrofitted 3 of their 747 aircraft to transport the components of the 787. An exception to this scheme is the A380, whose fuselage and wings are too large for sections to be carried by the Beluga. Large A380 parts are brought by ship to Bordeaux, and then transported to the Toulouse assembly plant by a specially enlarged road.

North America is an important region to Airbus in terms of both aircraft sales and suppliers. 2,000 of the total of approximately 5,300 Airbus jetliners sold by Airbus around the world, representing every aircraft in its product line from the 107-seat A318 to the 565-passenger A380, are ordered by North American customers. According to Airbus, US contractors, supporting an estimated 120,000 jobs, earned an estimated $5.5 billion (2003) worth of business. For example, one version of the A380 has 51% American content in terms of work share value.

EADS Airbus will be opening an assembly plant in Tianjin, China for its A320 series airliners, to be operational in 2009. AVIC I and AVIC II will be EADS' local partners for the site, to which sub-assemblies will be sent from plants around the world.

Employment data

Workforce by sites

Airbus site ¹	Country	Workforce
Toulouse ( Toulouse, Colomiers, Blagnac)	France	16,992
Hamburg ( Finkenwerder, Stade, Buxtehude)	Germany	13,420
Broughton, Flintshire, Wales	UK	5,031
Bristol ( Filton), England	UK	4,642
Bremen	Germany	3,330
Madrid ( Getafe, Illescas)	Spain	2,484
Saint-Nazaire	France	2,387
Nordenham	Germany	2,086
Nantes	France	1,996
Albert ( Méaulte)	France	1,288
Varel	Germany	1,191
Laupheim	Germany	1,116
Cadiz ( Puerto Real)	Spain	448
Washington, D.C. ( Herndon, Ashburn)	USA	422
Beijing	PRC	150
Wichita	USA	?
Miami ( Miami Springs)	USA	?
Sevilla	Spain	?
Moscow	Russia	?
Tianjin	PRC	planning
Total		56,966+

(Data as of December 31, 2006)

¹ Name of the urban/metropolitan area appears first, then in parenthesis are the exact locations of the plants

Airbus aircraft numbering system

The Airbus numbering system is an alpha numeric model number followed by a dash and a three digit number.

The model number takes the form of the letter "A" followed by three digits, e.g. A320. The succeeding three digit number represents the aircraft series, the engine manufacturer and engine version number respectively. To use an A320-200 with International Aero Engines (IAE) V2500-A1 engines as an example; The code is 2 for series 200, 3 for IAE and engine version 1, thus the aircraft number is A320-231.

An additional letter is sometimes used. These include, 'C' for a combi version (passenger/freighter), 'F' for a freighter model, 'R' for the long range model, and 'X' for the enhanced model.

Engine codes

Code	Manufacturing Company
0	General Electric (GE)
1	CFM International (GE/SNECMA)
2	Pratt & Whitney (P&W)
3	International Aero Engines (R-R, P&W, Kawasaki, Mitsubishi, and Ishikawajima-Harima)
4	Rolls-Royce (R-R)
6	Engine Alliance (GE and P&W)