Aerospatiale shift boosts hopes for reforms at Airbus
Friday 12 April 1996
British Aerospace, which has 20 per cent of Airbus, has been battling to turn the plane-building organisation into a separately incorporated group instead of a partnership. The German government has come out in favour of reorganisation but the French have until recently opposed the change.
In a surprise move, Louis Gallois, chairman of Aerospatiale, has called for an end to the system under which work on the aircraft is parcelled out to the consortium partners according to their shareholdings.
Mr Gallois accepted that the move, which could go hand in hand with the transformation of Airbus into a public limited company, may mean Aerospatiale losing out to rivals in competitive tendering. In an interview earlier this week, he said that airlines need reassurance about the future of the Airbus grouping and that this "is linked to the transformation of its status into a fully fledged company".
Mr Gallois stressed the need to react quickly to customers' demands but added that he does not think that the group can be transformed overnight.
Pressure to reform the structure of Airbus has been mounting in recent weeks following threats from the German government to withhold subsidies for the development of the partnership's next aircraft unless it begins a reorganisation.
Under the present arrangements, work is shared by members of Airbus - which in addition to BAe and Aerospatiale include Daimler Benz Aerospace and Casa of Spain - according to their participation. This has been criticised by the UK and Germany as inefficient but until now France has resisted change.
Britain and Germany have said they want Airbus turned into a conventional company with managerial freedom to make decisions about cost cuts without constantly referring back to the partners. The restructuring of Airbus could also allow the expansion of the partnership to help fund the next generation of super-jumbo aircraft.
BAe sources have dismissed press speculation that it would want an increase in its stake if Airbus is restructured.
The Airbus plans to build the 550-seater A3XX, could cost more than pounds 5bn and the existing partners are unlikely to be able to raise the capital. There is speculation that Airbus could embrace new partners from Asia and the Pacific Rim, where growth of airline orders is expected to be strongest over the next 20 years.
A recent survey of the airline market by Boeing estimated investment of $1,100bn on about 16,000 aircraft over the next 20 years with the bulk of the demand coming from Asia-Pacific. If Airbus becomes a separately incorporated company it will have more freedom to buy components from the most economic sources.
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