The tanned executives fronting Airbus’ annual press conference in Paris this month could afford to look relaxed as they announced a set of figures that exceeded all expectations.
The European planemaker delivered 635 aircraft in 2015, surpassing the previous year-end record of 629, set in 2014. It was the 13th year in a row that annual production figures had risen.
The company’s order backlog also grew to reach 6,787 aircraft, being valued at a staggering $1,000 billion dollars at list prices. By any yardstick, Airbus is a company at the very top of its game.
But past performance is no guarantee of future success. And Airbus’ officials, led by French engineer Fabrice Bregier, were keen to avoid complacency as they provided a prediction of the year that lies ahead.
One challenge is the ramp up of the A350XWB, the new twin-engine wide-body airliner that will go head-to-head with the Boeing 787 and 777 in the 280-to-366 seat passenger segment. Airbus delivered 14 A350s last year, lower than the 15 it had predicted. It wasn’t a lack of orders that caused the short-fall - far from it, Airbus has 762 A350s in its backlog. Rather, supply chain problems had hamstrung its abilities to meet its production target, caused mainly by problems relating to cabin components such as seats and lavatories. A shortfall of one aircraft would’t normally be considered much of an issue, until you realise that Airbus has to increase production of A350s from 14 to 50 this year. That is quite some ramp-up at a time that when Airbus still hasn’t resolved some of its supply issues that dogged it last year.
Specifically, the problem lies with Zodiac Aerospace, the French-based manufacturer of cabin equipment. Zodiac simply hasn’t been able to keep pace with seat and lavatory module production on the A350, restricting Airbus’ ability to meet aircraft delivery schedules. Over the past six months, Airbus has sent teams of engineers to Zodiac’s facility in an attempt to get on top of the problem. But production difficulties remain, much to the anger of Bregier, who has responded by throwing Zodiac off the A330neo programme , which is starting to move towards manufacture.
Bregier pulled no punches in Paris as he warned Zodiac that any more delays would not be tolerated. “We suffered a lot with Zodiac last year, and I expect them to do much better this year, especially as a lot of our A350 deliveries are linked to their performance on seats and lavatories.
“I was extremely patient with Zodiac last year because I believed they had understood the message and our improvement plans which were clear. But it took an extremely long time to put things in place. They were in denial. And when the top management of a company is in denial it is a recipe for failure.
“Zodiac got a wake up call, and it is focusing on its current order book. I deselected them on the A330neo cabin elements because they just cannot cope with what is ahead of us. However, I believe that they can do better, and they have plans to do better, but they are not out of the ditch.”
The difficulties Airbus has faced with Zodiac proves how large, complex, technology-based programmes such as modern aircraft can be severely impacted by the under-par performance of a single supplier. In 2016, Airbus needs to ramp up production of the A350 from 14 to 50 planes, so it has cannot afford any more delays.
“The issues with Zodiac are not yet fixed, there are clear action plans and I hope they will deliver, but we will see in the coming months,” added Bregier. “We have no plan to switch to other seat or lavatory suppliers in 2016. We need to make it work and I believe that if appropriate actions are put in place, then they [Zodiac] can make it work.
“We plan to deliver at least 50 A350s this year. I think this is workable, but it’s not a walk in the park. The design of the aircraft is stable, the assembly process is extremely efficient, the aircraft has tested at a much higher maturity than we expected. But we need also to have all the parts at the same time. And this is where we are struggling.”
Zodiac aside, the A350 as a programme is progressing well. The aircraft has been well received by airlines, who are buying it in droves. Airbus is planning to introduce a stretched derivative of the aircraft, the A350-1000, which will enter series production in 2017. It is also working on the A350 ultra long range variant with Singapore Airlines, which will fly non-stop from Singapore to the US, a flight of 19 hours. The A350 is eating into Boeing’s dominance of the wide body segment, taking sales away from the 767, 777, and 787.
Meanwhile, challenges also lie ahead on the A380 programme. Despite protestations that the aircraft is loved by the airlines who buy it, and by the passengers who fly it, Airbus simply hasn’t sold as many superjumbo as it had predicted. Indeed, 10 years after its first flight, there are only 179 A380s currently in service, and sales remain sluggish. Airbus made 27 A380s in 2015, and it was the first time that the programme had broken even. That’s a disappointment, on all levels.
But Airbus refuses to give up on the A380, insisting that more airlines are interested in buying it. John Leahy, the company’s charismatic chief operating officer - customers, who is charged with selling the superjumbo, stood up at Paris and gave a robust defence of its performance.
“We are making good progress on the A380,” he insisted. “It is well liked by airlines flying it and by the travelling public. But it takes a long time to sell it and for airlines to make a decision to move into that category.”
Leahy said that Airbus was working “diligently” with the airlines, encouraging them to think about how they could rebrand their businesses around the A380, enabling them to differentiate themselves from rival carriers. “It isn’t just a simple seat mile calculation. You also have to work with the airline on how they would use the aircraft, and how their marketing could change to take advantage of the attractiveness of the aircraft.
“We are working on sales campaigns - we won’t make a forecast for how many we will sell this year, the airlines place their orders when they are ready to place their orders.”
Ultimately, with passenger traffic numbers showing year-on-year increases across the globe, Leahy said that larger aircraft was the only way of getting more passengers through space-restricted airports. “Passenger numbers on the up - but airports aren’t expanding. The only way to flow people through airports like Heathrow is with bigger aircraft,” he concluded.