Airbus Moves to Rewire Its Management First

New York Times

“Airbus Moves to Rewire Its Management First”

This article addresses the issues that Airbus, a European airplane manufacturing company, is facing in the midst of the worst management crisis of its history. The company, which was formed in 1970 jointly by France and Germany to compete with American rival Boeing, is experiencing production difficulties that are preventing Airbus from releasing the model A380 plane into service on schedule. The main technical problem lies in both defective wiring and incompatible software between the Hamburg and Toulouse sites. However, the real issue is the inability of the company’s management to fix the mechanical problem at hand that is delaying the release of the A380 model. The article implies that under competent management, the problem could be fixed rather easily, but Airbus is still trying to fill the CEO position with someone who is capable of returning the company to a profitable status. Recently, the head of Airbus resigned after a shaky start, but the parent company of Airbus, the European Aeronautic Defense and Space (EADS) Company, has appointed one of its chief executives, Louis Gallois, to head Airbus. Mr. Gallois is a highly-experienced businessman, and by designating him to head Airbus, EADS is hoping to pull the company out of its management catastrophe.

Although placing a seasoned businessman such as Mr. Gallois at the top of Airbus will hopefully help the company recover some of its lost profitability, in order to understand the problems management is having at Airbus, several issues need to be considered. The most obvious factors affecting the management of Airbus are external factors included in the general environment. Two areas of focus are the political and legal situation and economic forces. In considering economic influences on the company, the article points out that since the Euro has appreciated against the dollar, Boeing has the advantage of lower production costs, thus strengthening the rival’s position against Airbus. This shows how the foreign exchange rate affects the company and its competition. However, the most influential external force is the political situation infiltrating the company. There is constant tension between Germany and France, the two founding countries, over control, management, and the allocation of the overhaul process outcomes (i.e., major job cuts at factory plants) Airbus is currently undergoing. Each