Learn from Google, Airbus chief warns aerospace industry

The aerospace industry must embrace competition from technology companies such as Google and SpaceX which are already having a revolutionary impact on the sector, the head of the Airbus Group told AFP in an interview.

Describing the scale and speed of innovation in Silicon Valley as both "frightening and fascinating," Tom Enders said the increasing digitalisation of the economy was having a profound impact on his company's business.

"I think that in the future, our industry will have to work much more closely with these new high-tech companies ... if only because these guys are increasingly intruding on our territory," said Enders, 55, who is half-way through a four-year mandate as CEO of the European aerospace giant.

Enders cited SpaceX, the space transport company founded by former PayPal entrepreneur Elon Musk, whose Falcon launch vehicles are taking on the market-leading Airbus-built Ariane in the commercial satellite launch market.

SpaceX has also mounted a legal challenge to the monopoly held by Boeing and Lockheed Martin for the launch of US government satellites.

Google in April acquired the drone start-up Titan Aerospace which aims to compete with Airbus in making high-altitude unmanned planes that are meant to take on tasks traditionally done by more expensive satellites.

"Aerospace is still a rather young industry but these people are even younger," he said. "And I think there is no debate as to which of us is the more vibrant industry. They are."

"The speed of decision and risk taking and all that is amazing," said Enders, speaking while in Normandy for events to mark the 70th anniversary of the D-Day landings.

A paratroop officer in the German army reserves who is a 25-year veteran of the European defence and aerospace industry, Enders also complained the European Union was stifling innovation and warned it must cut red tape.

"It should make us think as we look at the software industry, when you look at the IT industry at the Microsofts, Amazons, Facebooks, SpaceXs, Yahoos. It is all coming from the US."

Enders said many successful entrepreneurs in the United States were "bright young Frenchmen and bright young Germans" who had been forced to leave Europe to seek venture capital and a dynamic entrepreneurial environment.

Enders was appointed CEO of European aerospace giant EADS in June 2012 and immediately attempted a merger with Britain's BAE systems, a deal that would have seen the group replace Boeing as the world's biggest aerospace and defence company.

After the deal was blocked by Germany, Enders initiated an overhaul of the group's structure which reduced political influence.

He re-branded EADS into Airbus Group, reorganising the company into three divisions by merging the defence and space businesses. He has since led a push to expand the group's business outside of its home base in Europe, notably in Asia, the United States and the Middle East.

Airbus decided in 2005 to set up a joint venture in China to assemble the medium-range A320 passenger jet and the company plans to open an assembly line in 2015 in the southern US state of Alabama.

Enders said Airbus considered the project in the Chinese city of Tianjin a success and that it was vital the company developed a local identity as it expanded into foreign markets.

He said Airbus had allayed reservations from Chinese airlines about taking a China-made plane.

"We have demonstrated that they are just as good, some people say even better, as those assembled in Europe."

The Airbus Group would continue to embed itself abroad through new assembly lines, engineering centres and supply partnerships. "We clearly have beachheads that I hope we will be able to expand."

Enders said it was inevitable that the proportion of the Airbus workforce employed in Europe - currently 90 per cent of the company's 144,000 staff -- would fall as the international expansion gathered pace.

But he added: "If that one day would be 80 per cent or 70 per cent, we would still be a European company."

Airbus turnover rose by five per cent in 2013 to 59.3 billion euros ($80.9 billion). That compared to a rise of 6.0 per cent to 63.5 billion euros for rival Boeing.

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Airbus reports profit leap, shares jump

Airbus Group, formerly EADS, reported on Tuesday a near doubling of quarterly net profit, a rise in sales driven by helicopters, but a fall in new orders after an exceptional performance last year.

Net profit for the quarter rose by 93.0 per cent to 439 million euros (US$604.5 million).

The price of shares in the group rose by 4.91 per cent to 51.92 euros in early trading in Paris. The overall French market as measured by the CAC 40 index was up 0.20 per cent.

The value of orders taken fell by more than half to 21.1 billion euros from 49.5 billion euros.

This reflected orders taken for 103 aircraft on a net basis, after allowing for cancellations.

That was far short of the figure of 410 in the first quarter of 2013 which was an exceptional year for aircraft manufacturers, notably Airbus and its main US rival Boeing, as airlines rushed to renew their fleets after the financial crisis and in readiness for a forecast boom in air travel, mainly in emerging economies led by countries in Asia.

Airbus has already said that it will not be able to match the 2013 figures for orders taken.

However, Airbus Group held to its forecast that orders taken this year would exceed the number of aircraft delivered, and that its operating margin would be 7.0-8.0 per cent in 2015.

In the first three months of the year the group achieved an operating margin of 5.5 per cent.

Sales revenue by the group, which builds mainly Airbus airliners but also has wide interests in the aerospace sector from making helicopters to satellite equipment, fell by 5.0 per cent in the quarter from the equivalent figure last year to 12.6 billion euros.

Meanwhile, Airbus Helicopters, formerly Eurocopter, increased its number of orders taken by half.

Airbus Helicopters also increased the number of aircraft delivered to 74 from 58, and so raised sales by 14.0 per cent.

The Airbus Defence and Space division, grouping the two activities formerly known as Astrium and Cassidian, held new orders at about the previous level.

The group said that the overall performance meant that earnings per share had doubled from 28 euro cents to 56 cents.

Chief executive Tom Enders said that the group was holding to its forecasts but still had much to do by the end of the year, with the emphasis being on applying restructuring programmes.

The company is due to put its new A350 airliner into service by the end of the year. This aircraft is a long-haul plane with a fuselage made of composite materials.

The group changed its name to Airbus Group at the beginning of this year in a major refocusing of activities after a failed attempt to merger with British group BAE Systems.

It is now restructuring its defence and space activities to face increased international competition at a time of cuts in defence budgets by governments in the West.

At stock brokers Aurel BG in Paris, analysts said that Airbus had published solid results with sales exceeding expectations. They noted that the group had fallen behind Boeing in recent months but remained confident.

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Airbus Group sees profits jump in 2013

European aerospace giant Airbus Group on Wednesday announced a 22 percent year-on-year rise in net profit for 2013, despite one-off charges related to its new A350 wide-body aircraft.

Net profit was 1.5 billion euros ($2.06 billion) while earnings before interest, tax, depreciation and amortisation (EBIT) rose by 21 percent to 3.6 billion euros, it said in a statement.

Full-year revenue was up five percent to 59.3 billion euros, driven by increased aircraft deliveries.

For 2014 the group -- formerly known as EADS -- said it "expects moderate return on sales growth" and "confirms its 2015 return on sales target of 7-8 percent".

The final quarter of 2013 included a 434-million-euro charge "to reflect the higher level of costs on the A350 XWB programme", it said. The A350 XWB is a long-range, wide-body plane which is slated to come into service at the end of the year.

Airbus Group added that it planned to increase production of its popular A320 single-aisle planes from 42 to 46 per month from the second quarter of 2016.

Last month Airbus announced that it took a record 1,503 net orders in 2013, beating US rival Boeing which had 1,355 orders. But it trailed behind Boeing in terms of finished airliners delivered.

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France sells 1% stake in Airbus Group for 451 million euros

The French state has raised 451 million euros ($614 million) by selling a one per cent stake in European aircraft and defence corporation Airbus Group, the economy minister said on Thursday.

The divestment, of around eight million shares to institutional buyers, brings France's stake in the publicly traded group to 11 per cent -- the same as Airbus Group partner Germany.

Airbus Group -- the new name for what used to be known as EADS -- has seen its shares gain 74.63 per cent over the past year, to 56.44 euros per share, in large part thanks to management reforms carried out in 2013.

French Economy Minister Pierre Moscovici late on Wednesday announced the sale, saying it would lower the French government's stake to a level on par with that of Germany's, as per a bilateral pact. Germany recently raised its stake to the 11 per cent level.

Spain's government holds a smaller stake of just over four per cent in the European group.

Moscovici on Thursday revealed that 451 million euros had been raised from the stake sale.

France has been selling off some of its state holdings in companies in a bid to bring down its debt mountain, which is equivalent to 94 per cent of GDP. Last year it raised 2.4 billion euros through divestments, nearly half of that through an earlier sell-off of Airbus Group shares.

Airbus Group is riding high after announcing this week its best commercial performance in its history, with notably 2013 being a record year for orders of Airbus aircraft, though deliveries still trailed those of US rival Boeing.

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Aerospace giant EADS to cut 5,800 jobs

European aerospace giant EADS, the maker of Airbus aircraft, announced plans Monday to cut 5,800 jobs in its defence and space division over three years.

The layoffs, part of a major restructuring in the face of falling orders, will affect the group's work force in Germany, France, Spain and Britain, the company said in a statement.

The news came after a meeting of its European works council with EADS chief executive Tom Enders, whose bold plan to merge the conglomerate with Britain's defence group BAE Systems was torpedoed last year with a surprise veto by Germany.

"We need to improve our competitiveness in defence and space -- and we need to do it now," Enders said, according to the statement.

"With our traditional markets down, we urgently need to improve access to international customers, to growth markets. For that to work, we need to cut costs, eliminate product and resource overlaps, create synergies in our operations and product portfolio and better focus our Research and Development efforts."

He added: "That's what the restructuring and integration plan for our defence and space business is all about."

Anticipating fierce resistance from labour representatives, the company said it would do what it could to cushion the impact of the job cuts, due to be completed by the end of 2016.

Furloughed employees will be offered redeployment with 1,500 jobs at the company's Airbus and Eurocopter divisions.

About 1,300 short-term contracts will not be renewed, and with voluntary measures, the company estimated final redundancies to come in at between 1,000 and 1,450 employees.

"The Group also intends to enter into negotiations with its works councils to seek agreements on labour cost reductions which could help mitigate the social impact of the restructuring plan," it added.

EADS has previously announced that it is changing its name the name of the group to Airbus to raise its public profile.

The overhauled defence and space division, to be called Airbus DS, will have a streamlined legal structure to cut costs and be up and running by January 1, the company said.

Shares in EADS rose 0.82 per cent to 50.49 euros in Paris on the news.

A French union, the FO Metalworkers' Federation, reacted angrily to the announcement, protesting that EADS on the whole "is doing well financially and its order books are in good shape".

It said the group's focus on improving its profit margin should not come at the expense of its staff and urged the French state as a major shareholder to fight to protect jobs.

"FO calls on EADS to avoid layoffs and appeals to its sense of responsibility and solidarity so that no employee will be left behind," it said.

Enders has stressed that the company cannot continue with business as usual while government clients are increasingly resorting to cuts to the military to shore up strained public finances.

He has cited lost orders worth several billion euros (dollars) in Germany alone that the company had thought were certain.

In November, Germany's biggest union IG Metall held industrial action as a warning against the company's expected restructuring plans.

However, the overhaul is seen by management as unavoidable after the failed plan to merge with BAE.

That was shelved after objections from Germany, which had worried it would trigger major job losses.

The success of the Airbus division came after a radical restructuring in 2007 in a plan that originally called for 10,000 job cuts, but in the end cost 7,900 jobs.

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Airbus urges Berlin to unfreeze 600m euro loan payment

Airbus on Saturday urged the German government to pay out a promised final loan instalment of 600 million euros (US$830 million) for the construction of the A350, after the aircraft manufacturer said it had created German jobs in return.

Airbus chief operating officer Guenter Butschek told the German daily Tagesspiegel that the firm was offering 4,000 jobs - 250 per cent more than originally planned - in a bid to unfreeze the last loan tranche, which has been blocked for months by Berlin pending agreement on German-based manufacturing and research jobs.

"We have clearly kept our promises and are of the opinion that there is no reason to withhold the remaining amount," Butschek was quoted as saying. "The ball is now in the government's court."

But he added that Airbus, a subsidiary of France-based EADS, was capable of completing the A350 development programme even without the outstanding loan amount.

"We have proved with our first flight, and with 400 flight hours since then, that we can finance and develop such a project according to plan, even without the rest of the government loan."

The first A350 XWB wide-bodied passenger jets are scheduled to be delivered by the end of next year. The next-generation plane carried out its first test flight in June.

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Aerospace giant EADS could change name to Airbus, its plane-maker

European aerospace giant EADS may decide to change its name to Airbus, its better-known plane-making subsidiary, by the end of July to simplify and strengthen the brand, a source said on Wednesday.

But executives are torn over how useful a name-change would be for the group, which makes helicopters, missiles, drones and satellites.

The Airbus commercial plane division accounts for more than half of annual sales.

The issue highlights the big risks and opportunities involved in choosing, or changing, the name of a company or brand.

"This topic is in more-than-serious discussions. It's very probable that the name change will happen," said a source close to the situation, who declined to be named.

"In any case, it should be on the agenda at the board meeting validating half-year results," the source added.

EADS is due to publish these results on July 31, and the board meeting will take place beforehand.

The name change would mean that Airbus -- maker of the A380 double-decker superjumbo airliner and an arch-rival of Boeing -- would now group both military and civilian products.

EADS was created in 2000 by a merger of leading German, French and Spanish aerospace companies.

The name change has been on the cards for a long time, since it was believed that EADS, standing for the European Aeronautic Defence and Space Company, suffered from weak brand recognition.

But a hugely-publicised failed attempt by EADS and Britain's BAE Systems to merge last year has boosted recognition of the EADS name, causing some executives to question any potential name change.

"When EADS wasn't known, it (a name change) was of real interest, it would definitely have been added-value for the group," said one top executive, who refused to be named.

"But today, studies show that EADS is known, people know what EADS is particularly since the aborted merger with BAE Systems last year."

Others believe that naming the whole group Airbus could lead to a slight loss of identity for the plane-making division.

According to French economic daily La Tribune, EADS chief Tom Enders has set up a working group to study the technical and judicial implications of a name change.

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A good change perhaps? It is true that everyone recognises Airbus, but when probed with EADS, they start scratching their heads. It's going to be cute though, to have the name "Airbus" when you're also manufacturing flying machines for the military.

Tougher certification after Boeing 787 woes: EADS

Boeing's recent problems with the 787 Dreamliner aircraft have likely left regulators "a little bit nervous" about approving other planes, the chief executive of EADS said Thursday.

"I think the certification authorities, whether it's the FAA or any other, are probably a little bit nervous about these new planes now coming in, about the materials and the systems and the processes," said EADS chief executive Tom Enders.

"This is why we have refrained from... any schadenfreude about the problems in the 787, because we have had similar problems in the past," Enders said in a breakfast meeting with reporters in New York.

EADS's plane-making unit Airbus is at the early stage of the Federal Aviation Administration certification process of its A-350 aircraft, which, like the Dreamliner, boasts lighter weight and better fuel-efficiency.

"If industry runs into trouble, particularly as certification is concerned, that affects not just one manufacturer, but others as well," Enders said.

Enders's comments came as Airbus's chief competitor Boeing continues to work closely with the FAA to fix lithium-ion battery problems that led regulators to ground all 50 787s in use in mid-January.

Lithium-ion batteries burned on two 787s in January, causing a fire on a parked airplane at Boston's Logan Airport and smoke that caused an emergency landing in Japan.

On Monday, Boeing Commercial Airplanes CEO Ray Conner said the company would move "really fast" to get the 787 back in the air once the FAA approves its proposed battery fix.

Enders said one lesson from the Dreamliner's problems is that there may be a benefit to upgrading existing aircraft rather than embarking on entirely new designs.

"It's not completely risk-free" to modify existing designs, Enders said. "But it's of course much less risky than developing new aircraft and it comes for the fraction of the cost."

Enders said that the European Aeronautic Defence and Space Company had not gained business due to Boeing's problems with the 787 Dreamliner.

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It is true. With just a handful of aircraft manufacturers around, the aviation industry is so small that one mishap is enough to cause a ripple effect to everyone. Suddenly everyone is paying attention to batteries in the commercial jets to be sure what happened to the Dreamliner doesn't happen to their own planes. Airbus for one, reverted the A350 battery to lead based batteries instead of going ahead with litium-ion.