The news from Toulouse, France has been hard to believe:
* The A380’s delivery schedule has been delayed another six months.
* Former Airbus co-chief executive Noel Forgeard is under investigation for alleged insider trading after he and his family dumped millions of dollars worth of EADS stock in the months before the delays were disclosed.
* Angry A380 buyers are discussing legal actions to extract compensation for the late deliveries, and a key customer, International Lease Finance Corp., is said to be poised to cancel its deal for 10 superjumbos, which now will be delivered more than a year late.
London’s Financial Times newspaper reported Tuesday night that the crisis at Airbus had set off a heated argument in the French Parliament over whether prime minister Dominique de Villepin’s government still supported the embattled Forgeard. The flap could topple de Villepin’s government, the paper said.
Forgeard, meanwhile, denies he had any foreknowledge of the wiring problems that are causing delays in delivery. He also said the delay was mostly caused by problems with Airbus’ factory in Hamburg, Germany, comments that reportedly have infuriated Airbus staffers and may have led to major EADS shareholders ordering Forgeard to quit giving interviews.
“It’s an incredible display,” said Scott Hamilton, an analyst with Leeham Group in Sammamish.
“This is foolish on so many different levels,” added Teal Group analyst Richard Aboulafia.
Hamilton said he’s amazed by the way Forgeard has behaved since last week’s announcement.
“Instead of behaving like a man and accepting that this happened on his watch … he’s blaming Hamburg. He’s blaming (Airbus co-chief) Gustav Humbert. He’s blaming everybody.”
Forgeard’s attempts to justify his decision to sell are also hard to believe, Hamilton said.
“He’s invoking the Ken Lay defense,” Hamilton said, comparing him to the recently convicted Enron Corp. chief who blamed his company’s collapse on the misdeeds of underlings. “The other side was the Sergeant Schultz defense – ‘I know nothing.’ “
Either way, Forgeard comes across as being out of touch with what was going on within his company, Hamilton said.
If he really didn’t know about the delays “what the (heck) has he been doing?” Hamilton asked. “He ought to do the right thing and resign.”
The problems at Airbus go far beyond the scandal, Aboulafia said.
The real problem is that Airbus has bet the farm on the A380, which is a plane very few airlines really need, he said. The company took government aid and built an engineering marvel that isn’t selling, just because it could.
“This is the high price of easy money.” Aboulafia said.
Airbus should emerge from this flap a stronger company, he said. Within Airbus, “there are the party hacks and there are the commercially savvy officials, Aboulafia said. “This will kill the party that thought this project was a good idea.”
Boeing is not gloating at Airbus’ problems with the new A380, Scott Strode, Boeing’s vice president of 787 production, told me last week in Japan.
The company doesn’t have room to make many mistakes if it’s to deliver the 787 on time, he said. “I’m not ever going to be comfortable with our schedule, because it’s tight.”
Boeing has missed delivery deadlines in the past, Hamilton said.
“You talk to any Boeing engineer and their attitude is ‘There but for the grace of God go us,’” he said. “Any one of a billion things could go wrong (with the 787) and Boeing would find themselves in the same spot.”
The difference, Hamilton said, is how the top executives would react. “I’d lay a bet right now that if Boeing has delays on the 787, you’re not going to find (CEO) Jim McNerney taking potshots at his staff,” he said. “It’s outlandish.”
For more aerospace news and analysis, see Bryan Corliss’ Web log at www.heraldnet.com/ blogaerospace.
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