Airbus

Air Bus, is an aircraft manufacturing subsidiary of EADS, a European aerospace company. Based in Blagnac, France, near Toulouse, 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 21st century allowed the establishment of a simplified joint-stock company in 2001, owned by EADS (80%) and BAE Systems (20%). After a protracted sales process BAE sold its shareholding to EADS on 13 October 2006.

Airbus employs around 57,000 people at sixteen sites in four European Union countries: Germany, France, the United Kingdom and Spain. Final assembly production is at Toulouse (France), Hamburg (Germany), Seville (Spain) and, since 2009, Tianjin (People's Republic of China). Airbus has subsidiaries in the United States, Japan, PRC and India.

The company is known for producing and marketing the first commercially viable fly-by-wire airliner, the Airbus A320, and the world's largest airliner, the A380.

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."

"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."

In the mid-1960s, tentative negotiations commenced regarding a European collaborative approach. Individual aircraft companies had already envisaged such a requirement; in 1959 Hawker Siddeley had advertised an "Airbus" version of the Armstrong Whitworth AW.660 Argosy, which would "be able to lift as many as 126 passengers on ultra short routes at a direct operating cost of 2d. per seat mile." However, 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 more powerful US manufacturers. At the 1965 Paris Air Show major European airlines informally discussed their requirements for a new "airbus" capable of transporting 100 or more passengers over short to medium distances at a low cost. 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, later Aerospatiale (France), Arbeitsgemeinschaft Airbus, later Deutsche Airbus (Germany) and Hawker Siddeley (UK). A request for funding was made to the three governments in October 1966. On 25 July 1967 the three governments agreed to proceed with the proposal.

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. 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.

Airbus Industrie was formally established as a Groupement d'Interet Economique (Economic Interest Group or GIE) on 18 December 1970. It had been formed by a government initiative between France, Germany and the UK that originated in 1967. 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%.

Development of the Airbus A300

Read More: Airbus A300

Manufactured and marketed by Airbus. By early 1967 the "A300" label began to be applied to a proposed 320 seat, twin engined airliner. Following the 1967 tri-government agreement, Roger Béteille was appointed technical director of the A300 development 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 face of lukewarm support from airlines for a 300+ seat Airbus A300, the partners submitted the A250 proposal, later becoming the A300B, a 250 seat airliner powered by pre-existing engines. This dramatically reduced development costs, as the Rolls-Royce RB207 to be used in the A300 represented a large proportion of the costs. The RB207 had also suffered difficulties and delays, since Rolls-Royce was concentrating its efforts on the development of another jet engine, the RB211, for the Lockheed L-1011 and Rolls-Royce entering into administration due to bankruptcy in 1971. The A300B was smaller but lighter and more economical than its three-engined American rivals.

"We showed the world we were not sitting on a nine-day wonder, and that we wanted to realise a family of planes…we won over customers we wouldn’t otherwise have won...now we had two planes that had a great deal in common as far as systems and cockpits were concerned."

Jean Roeder, chief engineer of Deutsche Airbus, speaking of the A310

In 1972, the A300 made its maiden flight and the first production model, the A300B2 entered service in 1974; though the launch of the A300 was overshadowed by the similarly timed supersonic aircraft Concorde. Initially the success of the consortium was poor, but orders for the aircraft picked up, due in part to the marketing skills used by Airbus CEO Bernard Lathière, targeting airlines in America and Asia. By 1979 the consortium had 256 orders for A300, and Airbus had launched a more advanced aircraft, the A310, in the previous year. 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.

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 of, 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. It was becoming clear that Airbus was no longer a temporary collaboration to produce a single plane as per its original mission statement, it had become a long term brand for the development of further aircraft. By the late 1980s work had begun on a pair of new medium-sized aircraft, the biggest to be produced at this point under the Airbus name, the Airbus A330 and the Airbus A340.

Airbus A330, a new aircraft introduced in 1994

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.

Development of the A380

Read More: Airbus A380

In the summer of 1988 a group of Airbus engineers led by Jean Roeder began working in secret on the development of an ultra-high-capacity airliner (UHCA), both to complete its own range of products and to break the dominance that Boeing had enjoyed in this market segment since the early 1970s with its 747. The project was announced at the 1990 Farnborough Air Show, with the stated goal of 15% lower operating costs than the 747-400. Airbus organised four teams of designers, one from each of its partners (Aérospatiale, DaimlerChrysler Aerospace, British Aerospace, CASA) to propose new technologies for its future aircraft designs. In June 1994 Airbus began developing its own very large airliner, then designated as A3XX. Airbus considered several designs, including an odd side-by-side combination of two fuselages from the Airbus A340, which was Airbus’s largest jet at the time. Airbus refined its design, targeting a 15 to 20 percent reduction in operating costs over the existing Boeing 747-400. The A3XX design converged on a double-decker layout that provided more passenger volume than a traditional single-deck design.

Five A380s were built for testing and demonstration purposes. The first A380 was unveiled at a ceremony in Toulouse on 18 January 2005, and its maiden flight took place on 27 April 2005. After successfully landing three hours and 54 minutes later, chief test pilot Jacques Rosay said flying the A380 had been “like handling a bicycle”. On 1 December 2005, the A380 achieved its maximum design speed of Mach 0.96. On 10 January 2006, the A380 made its first transatlantic flight to Medellín in Colombia.

Airbus A380, the largest passenger jet in the world, entered commercial service in 2007.

On 3 October 2006, CEO 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 were using the older and incompatible version 4. The result was that the 530 km of cables wiring throughout the aircraft had to be completely redesigned. Although no orders had been cancelled, Airbus still had to pay millions in late-delivery penalties.

The first aircraft delivered was to Singapore Airlines on 15 October 2007 and entered service on 25 October 2007 with an inaugural flight between Singapore and Sydney. Two months later Singapore Airlines CEO Chew Choong Seng said that the A380 was performing better than both the airline and Airbus had anticipated, burning 20% less fuel per passenger than the airline's existing 747-400 fleet. Emirates was the second airline to take delivery of the A380 on 28 July 2008 and started flights between Dubai and New York on 1 August 2008. Qantas followed on 19 September 2008, starting flights between Melbourne and Los Angeles on 20 October 2008.

On 6 April 2006 plans were announced that BAE Systems was to sell its 20% share in Airbus, then "conservatively valued" at €3.5 billion (US$4.17 bn). Analysts suggested the move to make partnerships with U.S. firms more feasible, in both financial and political terms. BAE originally sought to agree on a price with EADS through an informal process. Due to lengthy negotiations and disagreements over price, BAE exercised its put option which saw investment bank Rothschild appointed to give an independent valuation.

Singapore Airlines A380 departs from London Heathrow Airport

In June 2006 Airbus was embroiled significant international controversy over its announcement of further delays in the delivery of its A380. Following the announcement the value of associated stock plunged by up to 25% in a matter of days, although it soon recovered afterwards. Allegations of insider trading on the part of Noël Forgeard, CEO of EADS, its majority corporate parent, promptly followed. The loss of associated value was of grave concern to BAE, press described 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 for failing to inform investors of the financial implications of the A380 delays while airlines awaiting deliveries demanded compensation. As a result EADS chief Noël Forgeard and Airbus CEO Gustav Humbert announced their resignations on 2 July 2006.

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; however in September 2006 BAE agreed the sale of 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, leaving Airbus entirely owned by EADS.

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 reorganisation plan for Airbus. He will be succeeded by EADS co-CEO Louis Gallois, bringing Airbus under more direct control of its parent company.

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". As of 16 September 2008 the Laupheim plant has been sold to a Thales-Diehl consortium to form Diehl Aerospace and the operations at Filton have been sold to GKN of the United Kingdom. The announcements have resulted in Airbus unions in France planning to strike, with German Airbus workers possibly following.

At the end of 2009, another bold project was launched. The Airbus Finance Improvement & Transformation (AFIT) initiative has been established as a platform to drive continuous improvement across Finance and beyond. During the AFIT Kick-Off Meeting, Harald Wilhelm, Airbus CFO, explained that this new challenging program will contribute to achieve the vision of a streamlined and harmonised Finance Function. To reach this objective AFIT will be focused on four improvement areas: Performance Management and Operational Reporting, Business Partnership and Anticipation, Accounting / Controlling Process and Tools, Airbus Military Roadmap.

Airbus A340-600, a long-range four-engined widebodied airliner

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 widebody 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". Those studies indicated a maximum fuel efficiency gain of 9-10% for the NSR. Airbus however opted to enhance the existing A320 design using new winglets and working on aerodynamical improvements. This "A320 Enhanced" should have a fuel efficiency improvement of around 4-5%, shifting the launch of a A320 replacement to 2017-2018.

In 24 September 2009 the COO Fabrice Bregier stated to Le Figaro that the company would need from €800million to €1billion over six years to develop the new aircraft generation and preserve the company technological lead from new competitors like C919, scheduled to operate by 2015-2020.

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