Airbus squeezes suppliers to cut £1bn from costs

Airbus Industrie, the European aircraft manufacturer, is seeking to cuts costs by £1bn over the next three years with most of the savings coming from its suppliers.

Noel Forgeard, the chief executive of Airbus, briefed 350 of the company's senior managers in Toulouse yesterday on the radical plan that would reduce the company's €15bn cost base by 10 per cent by 2006. There is unlikely to be much impact on Airbus's 46,000-strong workforce.

The cost cuts are part of an efficiency drive designed to make Airbus more competitive against Boeing and also protect it against a further weakening of the US dollar.

Mr Forgeard said at least half and probably more of the efficiency gains would come from suppliers, with whom Airbus spends €10bn to €11bn a year. Its major subcontractors include GKN, Rolls-Royce and Smiths Industries in the UK, Thales of France and, in the US, General Electric, Pratt & Whitney, Honeywell, Rockwell and Goodrich.

"All of the community that we work with will have to share the burden. Often, the margins of our subcontractors are much above out own," Mr Forgeard said.

He stressed, however, that Airbus remained confident of its profitability over the next two years even if the dollar did weaken substantially, saying that it had hedged $40bn of future revenues at an exchange rate of $1 to €1 or below. About half Airbus's annual revenues are in dollars.

Mr Forgeard said that at $1.40 to the euro, Boeing had a better cost base than Airbus, but at $1.18 Airbus was more competitive. Airbus has based its production plans on a euro exchange rate of $1.12.

The Airbus chief executive said he remained confident that it would produce more aircraft than Boeing this year for the first time. Airbus has firm commitments from customers to deliver 317 aircraft and has a production target of 300 aircraft. Mr Forgeard refused to speculate on what would happen to deliveries in the event of a new Gulf war but said Airbus planned to update the market in April.

Separately, John Leahy, the chief commercial officer at Airbus, said it intended to account for half the aircraft market among low-cost carriers after its success in winning an order for 120 A320 jets from easyJet last year. He shrugged off Airbus's failure to win a similarly sized order from Ryanair, saying Michael O'Leary, the chief executive of the Irish carrier, had been "half-hearted" in his interest. Mr Leahy and Mr Forgeard did not bother to go to Dublin to see Mr O'Leary because they felt the competition for the order was not "transparent".

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders