Airbus - Thomas Enders

Major Tom no longer in the left seat of the Airbus cockpit

Martina Roters
24.05.2019
2 pictures
6 minutes

A “shepherd boy with a degree” – in Thomas Enders’ own words – rose to become the world-renowned but abrasive CEO of the Airbus aviation and defence group. The Enders era comes to an end in mid-April. Planned step-down? Or linked to corruption investigations after all? Let’s take stock.

Franco-German balancing act

Chess moves

The relocation of the Group headquarters to the French city of Toulouse was therefore seen as a clever move on his part. In time, he succeeded in shaking off the jealousy and intrigue and growing the corporation into an international player, fit to hold a candle to its main competitor Boeing. Over his term of office, he succeeded in almost halving the control of the shareholdings held by the German, French and Spanish governments to a blocking minority of 11.0 (D), 11.1 (F) and 4.2% (SP). He is nevertheless said to have good relations with the Elysée Palace and Downing Street.

BAE debacle

It was a flawed assessment of the situation in Berlin, of all things, that led to a debacle in 2013. There were already many sceptics about Enders’ intended merger with BAE, the British technology and defence company, a merger that could actually have jeopardised its arch-rival Boeing. At the time, approximately 30 percent of Boeing’s profit came from its defence division and BAE supplied a number of crucial control systems. However, as Enders himself reported, the merger actually failed because of Angela Merkel’s vehement veto.

Corporate malaise

Another of the challenges possibly not overcome was the erroneous estimation of the progress speed of projects. Delivery problems with the A380, which cost orders worth billions, were not due to the development phase but, first and foremost, the industrialisation of the complex flying miracle that required over four million components to build.

Development, production and quality problems all added up to create the fiasco surrounding the A400M military transport plane into which “money was sunk”, according to Enders. As the cost of the project spiralled out of control, Enders, who has been spotted wearing red cowboy boots with a tuxedo, held a gun to the European governments and unceremoniously urged them to share the costs, which by this stage amounted to billions.

A380: From much-loved baby …

Enders had to announce one of the most painful decisions at his final Annual General Meeting. Whereas back in 2015 the ex-military man spoke unusually tenderly and with pride about “our Airbus baby, which we have featherbedded from its initial conception to its first steps in design and production”, he then had to publicly carry the giant baby to its grave (WingMag reported). How did it come to this?

The plan really sounded like a good one: Enders wanted to outdo the world’s largest 4-engined passenger aircraft, the Boeing 747, with a long-haul aircraft that would consume less fuel but transport twice as many passengers. The massive development costs were to be recouped by a correspondingly high number of sales.

Emirates, the airline predominantly based on a “hub business model”, offering mainly long-haul flights, such as Dubai-Singapore, became Airbus’ much-valued main customer. The airline also flies a high proportion of affluent customers who occupy First Class suites and Business Class seats. A further benefit of the A380 was the fact that the high number of seats in the ‘Superjumbo’, as it became known, took pressure off slots at the hub airport.

… to problem child

However, it proved difficult to make up for lost sales due to delayed deliveries as the general trend in aviation was moving increasingly towards point-to-point connections in slightly smaller aircraft, like the 787 or the A350. Qantas CEO, Alan Joyce, was quoted as saying that he could operate two 787s more economically than one A380. And other airlines were also seeking greater flexibility and lower risk (due to aircraft not taking off full and hence less economically).

Even the company’s most valued customer Emirates approached Airbus asking for a more cost-efficient version with improved aerodynamics and more fuel-efficient engines, an A380 NEO, as it were. But Airbus didn’t bite.

In 2018, Emirates reduced its order for 162 A380s by 39 and instead ordered A330 NEOs and A350s. This sounded the death knell for the A380, and possibly not the only one. Politics apparently played a role as well. Behind closed doors, the CEOs of various airlines admitted that Trump’s government was exerting serious pressure on them not to buy A380s. China would actually have been the perfect match for the A380 but orders were not forthcoming. Did the Chinese government not wish to snub Trump’s government?

Positive balance sheet despite allegations of corruption

The bottom line is that Enders can point to a positive balance sheet for his term of office. The A350 range will shortly break even and this has undoubtedly contributed to the fact that, despite various setbacks, Enders was able to announce record profits of €5 billion.

And he did so at a time when the corporation is having to counter allegations of corruption. Having said this, it was actually Enders’ management that uncovered the “irregularities” and reported them to the authorities. American and British legal firms were appointed to relentlessly investigate the matter, an action that drew hostility from the French camp, which feared high fines and the leakage of confidential information to the Americans. Despite this, last year the Public Prosecutor’s Office in Munich found no evidence of bribes relating to the Eurofighter, although it nonetheless imposed a fine of €81.25 million on Airbus for negligent breach of supervisory duties.

The matter is now closed for Enders. He departs with his “golden handshake”, a €37 million pension package and can now fly helicopters in his spare time – the dream of the young shepherd boy, whose fascination about flying began the day a helicopter had to make an emergency landing on the field in front of his parents’ house.

Who will take his seat in the cockpit?

Enders has passed it onto his Number 2 in the corporation, Guillaume Faury. The latter made a name for himself with the Airbus helicopter division and was most recently responsible for the Airbus Commercial Aircraft division. The wiry French triathlete, who is seen as having physical and mental strength, is regarded as a man with a profound sense of detail. He has persistently driven forward modernisation and digitalisation in the helicopter division.

What is more, he decided to make a ‘sortie’ into the automotive industry at just the right time. He was appointed Head of Development at Peugeot between 2010 and 2013 and is therefore untainted by the Airbus corruption scandal.

As he took up office, he also made grandiose promises. One example was the announcement that the next generation of aircraft will be developed at the same time as the manufacturing facilities for their production.

And, he also added a vision: “The manufacturer that is first to develop an emission-free commercial aircraft will dominate the competition in the 2030s. That should be our goal.” The future will be the judge of the import of his words. Read more here about Faury’s vision.

Title page: Wikimedia Commons – World Economic Forum – https://commons.wikimedia.org/wiki/File:Thomas_Enders.jpg

by Martina Roters

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