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Airbus strategy review augurs clean break under new CEO

Stock MarketsDec 13, 2018 07:08AM ET
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© Reuters. FILE PHOTO: Pilots celebrate with Guillaume Faury, President of Airbus Commercial Aircraft, after landed an Airbus A330-800 aircraft during a flight event presentation in Colomiers near Toulouse

By Tim Hepher

PARIS (Reuters) - Airbus has launched a strategic review to outline changes under incoming chief executive Guillaume Faury as it faces industrial challenges and prepares for overdue modernization, industry sources said.

The "Airbus Next Chapter" review involves a team of planners working outside the normal strategy organization in pursuit of a break from years of industrial problems, management feuds and an ongoing bribery scandal.

It is being led by former investor relations chief Julie Kitcher in what one insider described as a signal to financial markets that profits will be embedded in strategy, as the once state-sponsored European project marks its 50th anniversary.

Planemaking boss Faury, who becomes CEO when Tom Enders retires next April, "wants to go fast and introduce a new state of mind; he wants to turn the page on the past," a person familiar with the company said.

Airbus declined comment on the review, which is designed to war-game strategic decisions and possible structural changes.

Founded in 1969, Airbus (PA:AIR) has risen to compete on a par with Boeing (NYSE:BA) and is one of Europe's leading exporters.

But its growth has been punctuated by Franco-German tensions, personal rivalries and most recently a crippling bribery investigation that accelerated management departures.

The review may address how Airbus can meet demand by sharply ramping up production of jets like its A320. One previous taboo that may come up for discussion is a fragmented production system securing jobs in Britain, France, Germany and Spain.

The A320 is the lifeblood of Europe's largest aerospace group, described by operations chief Tom Williams (NYSE:WMB), who retires later this month, as the "golden goose".

Executives are warning Airbus must not find itself lacking in proven technology for the A320's successor after 2030, as it had been in wide-bodies when Boeing launched its 787.

For now, Airbus is winning a bigger slice of the market on the A320 but some analysts say it has fallen behind Boeing in manufacturing techniques - a gap that could grow if Boeing launches a mid-market jet with a new factory system.

The review may study how Airbus can compete with Silicon Valley for talents in the digital era, while handling a wave of departures through retirements and a board-driven clearout.

Spurning global firms that typically work for Airbus, Faury has brought in Zurich-based consultants Egon Zehnder who are better known as head-hunters.

The roll-call of scheduled retirements continued this week as Alberto Gutierrez was named head of military aircraft as Fernando Alonso steps down after stabilizing the troubled A400M.

Programmes chief Didier Evrard, who led two of Europe's most ambitious projects, the Storm Shadow/SCALP cruise missile and A350 jetliner, is due to retire this month and will be replaced by an internal candidate from services or engineering.

Some changes are happening already, with Airbus switching its quality-control chief this week after a series of snags.

Airbus strategy review augurs clean break under new CEO

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