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Memo From Airbus CEO, Tom Enders By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

 

 

 

Boeing may have beaten Airbus in respect of airplane orders received and in the number of airplanes delivered to customers last year but not only did the European planemaker meet full year delivery guidance but also set yet another new record having delivered a total of  800 aircraft to 93 airline customers in 2018. Contrast that number against the 588 aircraft that Airbus delivered to airlines in 2012, the year that Tom Enders became Airbus CEO or the 453 airplanes the company delivered in 2007, the year that Enders was appointed as CEO of Airbus Commercial and one can justifiably conclude this to be a fantastic record of achievement as he prepares to stand down from Airbus later this year and importantly, one that he can be very proud. I  might also add here that exactly the same can be said of Tom Williams, Chief Operating Officer of Airbus who retired from the company just a couple of weeks ago.

For the record and in respect of aircraft sales, Airbus received a total of 747 net orders in 2018 compared with the 1,109 the company received in 2017. At the end of 2018, the backlog of Airbus commercial aircraft reached a new industry record to stand at 7,577 aircraft compared with 7,265 at the end of 2017.  Boeing by contrast racked up a total of 893 net orders in 2018, down from a previous year figure of 912 net orders received in 2017, but well ahead of Airbus. The Chicago based airplane manufacturer also managed to deliver 806 airplanes to airline customers in 2018, up from a figure of 763 in 2017. Boeing’s order backlog at the end of December 2018 stood at 5,873 aircraft.

Both Airbus and Boeing suffered problems from suppliers last year but in statement accompanying sales and delivery figures this week, both appear pretty confident that these have now been resolved.  Outgoing Airbus CEO Tom Enders was in excellent form in London last evening and I thought that it might be useful to repeat a small part of the address he gave at a reception which attended by a number of MP’s and also the Chancellor of the Exchequer, Philip Hammond.

Referring to the wing integration centre that the company opened in February and thanking Her Majesty’s Government and the Welsh Government for their support Enders said that:

“In short, I hope everyone agrees that what we do in the UK matters” and “Which is why Brexit is such an important issue for us. I am upbeat but I have to admit I’m a little bit frustrated about that situation. Brexit is a very important issue for us – issue is the wrong word. It’s giving us and a lot of companies a big headache, for Airbus, to our competitiveness and possibly also presence in the UK”.

“With less than three months to go, the future shape of the UK’s relations with the EU and its member countries remains extremely unclear. For any international business making investment decisions – all big investment decisions – go far beyond Brexit, this situation is very hard to bear. Tom Williams has spoken plainly and openly a couple of times over the last 18 months on this”.

“Our organisation, integration and set up is based on the free movement of goods, people, resource and capital around Europe. That was the basis, which we thought was a solid one, on which we created the Company. It has been optimised for competitiveness over many years. In the case of commercial aircraft almost 50 years. Being competitive is how we survive. Our factories in the UK are highly efficient. We must not lose this competitiveness, either through increased financial or regulatory burden, or through a lack of clarity that will make future investment very difficult. If our competitiveness is undermined, then our future is compromised”.

“Like other companies, we have begun stockpiling parts so our factories can continue to function in April and beyond. I think our sector has been successful in finding a solution for EASA certification but not on customs, which is going to be costly and which will require a lot of time to adapt to a new system. We spent already many millions, I would say at this point double-digit millions for contingency planning and preparations, and this would probably be only a small fraction of what an unprepared, disorderly Brexit could cost us”.

“Questions remain on the magnitude of the consequences of the exit from the single market for services. And we would prefer the UK to remain a partner – this is very important for us, we’ve said this clearly and also in Brussels – in space and defence and to retain this very important strategic partnership with the EU on wider R&D. Every thinking person can only say it’s madness if the EU 27 and UK split in this very important matter of defence, security and space co-operation”.

“But what we and many other British businesses need most urgently, is for politicians from all sides to come together and pass a pragmatic agreement that allows an orderly Brexit. Sorry you’ve heard this many times but it’s important for us. We don’t see any specific benefits in the current deal. It’s just a lot less bad than a ‘no deal’.

“The Brexit vote of 2016 came as a shock to many of you and many of us international partners on the continent, but the ensuing political process, the irresponsibility of major political figures, the chaos that followed, the somewhat theatrical scenes in the House of Commons – are deeply disturbing and could have long term consequences, not least for decisions to invest in this country. This will be even more the case if this country really crashes out of the EU in April”.

“Hence my plea to decision-makers in London: Whether you think that leaving the EU is good for the UK or not, by all means: stop filibustering around this issue, allow for an orderly, agreed Brexit and find an agreement with Brussels. There is an agreement today on the table. I don’t want to express a preference here, I mean if there is another agreement there is another agreement but do it now! The uncertainty is really unbearable. Or else if that goes on for weeks and months I think the impact on businesses and future investment decisions will be most severe”.

“I hope you forgive me but I say all of this in the spirit of friendship and partnership. Friends should be here to support, but also to tell the truth as they see it before important decisions are taken. Let me finish by saying how incredibly proud I am of everything we do in the UK, everything we built here in terms of additional presence in the last two decades, and that pride permeates through all of our activities, our people, our production and our products”.

“We see ourselves as a good corporate citizen here and I hope you do too, adding value to the British economy – over £6 billion in terms of revenues operating here in the UK and generating thousands of jobs. Please raise your glasses, and join me in a toast to express our sincere hope for this continued great friendship and partnership between Airbus and the UK!”

CHW (London – 10th January 2018)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue

 

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