Unfinished Business: Outgoing Airbus CEO Tom Enders's To-Do List
A380 dilemma and likely bribery provision need to be addressed
German chief’s term still has 15 months to run in long goodbye
Airbus SE boss Tom Enders may have announced his departure, but with 15 months left on his contract the German executive’s in-tray remains as full as it has been during his first five years in the top job.
Four major issues still in the hands of the outgoing chief could have a bearing on Airbus’s future success and profitability, long after he has departed the scene.
Airbus shareholders are wondering just how much “significant” means in real money. That’s the term that Enders has used to describe the penalties the company might face as a result of investigations into corruption claims that center on its use of middlemen in defense and jetliner deals.
Somewhere along the line, Airbus is likely to post provisions against the cost of a settlement with prosecutors -- and the sums could be eye-watering. Kepler Cheuvreux’s price target for the company envisages a charge of 2.5 billion euros ($3 billion), and the investment firm warned last week that the figure may be an underestimate given the extent of a management shakeup that will also see jetliner-unit chief Fabrice Bregier unexpectedly leave in February.
Airbus’s A380 double-decker has stopped selling and looks ready for retirement, but no one in the company has been prepared to say so. While the superjumbo is popular with the flying public, airlines struggle to fill its cavernous interior and are put off by four-engine economics in an era when leaner twin-turbine wide-bodies rule the skies.
Only one carrier, Dubai-based Emirates, is an unbridled enthusiast for the A380, with more than 140 on order and plans to buy more -- but only if Airbus pledges to maintain long-term production and carry on revamping the plane. The manufacturer is reluctant to make that promise, while wondering if the leviathan simply came too soon, and whether growth in travel might drag the market back in its direction. Should Enders keep build rates ticking over at unprofitable levels, or bite the bullet and dump the flagship?
Airbus has been more successful at selling planes than building them in the past couple of years. While the manufacturer has racked up mammoth backlogs for its two key models, the A350 wide-body and the re-engined A320neo single-aisle series, getting those aircraft to customers on time and in good order has proved more of a challenge.
The A350 has been dogged by problems with its interior fittings as suppliers struggle to keep pace with the production schedule, while a Pratt & Whitney turbine that’s one option for powering the upgraded A320s has lurched from one glitch to another. Airbus reckons it’s just about out of the woods with both models; Enders needs to make sure that’s the case and that no more issues emerge. Delivering, not designing, planes is what generates cash.
Next in Line
The new favorite to succeed Enders is Guillaume Faury after the helicopters chief was promoted to head up the jetliner arm, Airbus’s biggest division, once Bregier leaves after apparently being overlooked for the top job.
While Faury’s boss is clearly a fan, describing him as representing “the next generation of leaders,” he stopped short of fully anointing the 49-year-old, withholding the chief operating officer title that had been awarded to Bregier during the company’s last big organizational shuffle. The i’s may be dotted and the t’s crossed by the time of Airbus’s annual shareholder meeting in April, but for the moment a handful of other high-flyers from across corporate France may feel they’re still in the running.