Airbus Tightens Belt With New Corporate Shake-Up
September 30 2016 - 5:40AM
Dow Jones News
LONDON—Airbus Group SE is to merge headquarters and eliminate an
unspecified number of management jobs in a new restructuring plan
to improve profitability and focus more squarely on its largest
unit that makes airliners.
Airbus Chief Executive Tom Enders said on Friday that the
restructuring would yield significant savings, facilitate faster
decision making, and narrow a profitability gap to rival Boeing
Co.
Europe's top aerospace company said that it will integrate the
headquarters for the group and the commercial-jetliner operation
for which Airbus is best known.
"We aren't just trying to get leaner at the shop-floor level, we
are really starting at the top of the company," Mr. Enders
said.
Merging the corporate structure with the jetliner unit soon
should yield financial benefits. "I would expect, starting from
next year already, we should see some of these savings come to the
bottom line," Mr. Enders said in an interview.
The scale of the savings, as well as the number of layoffs and
costs to see them through aren't clear yet, he said. Those will
depend on negotiations with labor representatives that are now
getting started. The consultation process is set to begin next
Tuesday.
Mr. Enders said the job losses won't be "insignificant" though
smaller than the almost 8,000 jobs cut in a previous restructuring.
The goal, he said, would be to make the winnowing of management
ranks "as thorough and substantial as possible."
Despite an order book for jetliners that stretches out for
several years, Airbus faces financial pressures. Costs to build its
new A350 long-range jet have proved higher than planned. The A400M
military transport plane has suffered repeated technical problems
and delays, leading to repeated hits against earnings. In July,
Airbus was forced to announce a cut to production of the poorly
selling A380 superjumbo from 27 planes last year to 12 in 2018 and
a return to losing money building its flagship jetliner.
Mr. Enders said those pressures weren't driving the
reorganization. "The most important thing is the company becomes
faster and leaner and thereby enables transformation across the
entire group."
The Airbus chief executive has become increasingly concerned
faster moving technology startups could steal some the company's
business. Elon Musk's Space Exploration Technologies Corp., or
SpaceX, has already reshaped the rocket business, driving Airbus
also to purchase lower cost satellite launch options.
Airbus also faces stiff competitive pressure in its commercial
plane making business where it and its larger rival Boeing have
enjoyed a period of record plane orders, swelling their combined
backlog to more than 11,000 planes to be delivered. Now executives
at both companies are focusing on how to build them profitably.
Boeing has been restructuring under its new Chief Executive
Dennis Muilenburg, who took the top job last year after running the
Chicago-based company's defense business. Mr. Muilenburg has
refreshed Boeing's executive ranks, promising growing margins for
the commercial airplane and defense units.
At Airbus, Fabrice Bré gier, who runs the commercial airliner
unit, will also serve in the newly created role of group chief
operating officer, responsible for supply chai and other functions
to underpin.
Mr. Enders said the restructuring should "contribute" to closing
the profitability advantage that Boeing has.
The move is the latest in Mr. Enders' four-year campaign to
overhaul the company in the wake of the 2012 failed merger attempt
with Europe's largest arms maker BAE Systems PLC. "For me this is
the logical conclusion of the journey we started in 2012," Mr.
Enders said.
After the deal faltered on German government opposition, he won
shareholder backing for a new structure that reduced French, German
and Spanish government involvement in company decision making, a
legacy of the founding of the company in 2000 through the
combination of European aerospace and defense assets.
Airbus in 2013 moved to merge defense and space assets and shed
some businesses assets not central to its aerospace business.
With the latest shift, the move of headquarters functions to
Toulouse from their former home of Paris and Munich should be
completed, Mr. Enders said.
Even though the restructuring is focused on the group
headquarters and commercial airplane unit, Mr. Enders said the
defense and helicopter activities remained "integral" to the
company. They would also benefit from reduced costs, he added.
The merged entity will carry the Airbus name from January 1.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
September 30, 2016 05:25 ET (09:25 GMT)
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