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Airbus names Faury to pilot planemaker through turbulence

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Yes, I’m ready for this. Source: Reuters

Airbus named Guillaume Faury, the head of its plane-making division, as new chief executive, to take over from Tom Enders when he retires next spring. The 50-year-old Frenchman will have to contend with numerous challenges facing the world’s second-largest producer of aircraft.

Many problems stem from order books that are too full amid surging demand for civilian planes. Airbus has enough orders to last 10 years and more but faces bottlenecks such as the supply of engines for its A320neo, launched two years ago and still working out bugs.

The Pratt and Whitney engines have been marked by defects that required planes to be grounded and led to unexpected, additional maintenance. Alternative engines from CFM have not been able to take up the slack. At one point, Airbus had a hundred finished planes sitting on the ground waiting for engines, prompting the industry joke that they were “gliders.”

Bribery and corruption investigation

The delays make it unlikely that Airbus will be able to meet its target to deliver 800 aircraft this year. Through the end of September, it had delivered only 503, leaving at least a hundred a month to finish before the end of the year. In September, it made only 69.

But the trinational enterprise — jointly held by Germany, France and Spain — also faces probes into alleged bribery and corruption charges in connection with orders for aircraft, helicopters and satellites. US, British and French authorities are investigating.

Mr. Faury is not personally implicated in the charges but will have to deal with them as the new CEO. There are other challenges as well. The Future Combat Air System (FCAS) is an unprecedented effort to coordinate development of drones, satellites, reconnaissance and fighter jets, but it has encountered delays, not least because of prickly leadership demands from partner Dassault.

In space technology, one of Airbus’ traditional strengths, the planemaker faces new competitors, such as Elon Musk’s Space X and Jeff Bezos’s Amazon. Airbus can’t afford to be distracted: With the OneWeb project of putting up a constellation of some 900 satellites, the planemaker will take on operational risk in a space venture for the first time.

Troubled A320neo is most immediate problem

But it is the issues with the A320 that will demand Mr. Faury’s immediate focus. Germany’s Lufthansa, the largest European airline, has been increasingly vocal about its dissatisfaction. “The plane has been in operation for nearly two years,” said a spokeswoman for the airline. “So we shouldn’t be seeing these kinds of teething troubles anymore.”

The airline has received only 13 of 20 A320s due and can use only half of them while the rest go into maintenance, forcing Lufthansa to cut back its flight schedule. The engines vibrate so much, pilots shut them down during flight (though this does not impinge safety, the airline stresses). Lufthansa has to replace the engines frequently and doesn’t have any more in inventory.

To make up for some of the delays, Lufthansa has procured a half dozen A320s that run on the older engines. These, however, use more fuel just as oil prices are rising. Plus, the higher emissions and louder noise limit use and lead to penalty fees.

Normally a delivery contract will force the supplier to make up these financial costs, but it is Lufthansa which suffers the loss of image. Even so, the airline just ordered 27 more A320neo and A321neos before an option ran out at the end of September.

Lufthansa is more patient than other customers. Qatar Airways canceled its orders when the first problems surfaced in the new planes, and US discounter Spirit Airlines suspended its deliveries until the problems are solved.

Mr. Faury’s appointment, which had been expected since he took over the civil aircraft division in February after several years at the head of Airbus’s helicopter business, is part of a leadership transition. The two top positions traditionally have been divided between the major shareholders, France and Germany. So German businessman Rene Obermann is expected to take over the chairman position in 2020 when French chair Denis Ranque retires.

Thomas Hanke is Paris correspondent for Handelsblatt. Jens Koenen covers aviation. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the authors: hanke@handelsblatt.com and koenen@handelsblatt.com.

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