The political ins and outs at Airbus

bits44 · Post by **bits44** » 09 Nov 2006, 23:46

A very interesting and enlightening article on the inner dealings at EADS and Airbus.

http://www.economist.com/business/displ ... id=8134768

Zenfookpower · Post by **Zenfookpower** » 10 Nov 2006, 00:44

Unbelievable story... Thanks for the posting...

Post by **ElcoB** » 10 Nov 2006, 01:47

This kind of attacks on Airbus in particular and the European economy in general happens almost every day.
These attacks come from a press who promotes free unregulated markets, no state intervention and -gasp- no union intervention. This is the so called "Anglo-Saxian" approach of the economy.

This article is very bad written: the story is presented so complicated that after a few lines you start to wonder and feelings like "this must be serious" start to emerge.
But ......no panic : the auther himself says what it is all about:

* ....the storm that helped bring Airbus down to earth.

* ....it risks driving the now-ailing aircraft-maker back into increased state ownership.

* ....The deal that doomed Airbus has its origins........

So, Airbus is coming tho earth, ailing and doomed.
That is the message you get before he begins to describe a series of scandals and malversations of wich a lot is not proven, are rumours or exagerations.

Have there been troubles and malversations around Airbus? I think yes.
But not more and probably of less magnitude as in the USA with Boeing.
If you don't believe me, google for "financial scandals boeing" . You will have over 700.000 hits and there are quit some readings far more spectacular than this article.
And yes, if you google for "financial scandals airbus" you only have half as much hits.

Just one other point :

.......it would mean privatisation and re-nationalisation in less than a decade, which may not do Airbus any good at all.

Also in other places in the article, it is suggested that state ownership or intervention is bad.

Yes it is bad for stakeholders their profits in the short term, I agree.
But in Europe we have wages, lay-off conditions, healthcare provisions and pension regulations no heard of in the USA. Our governments, with all their faults, nevertheless take some care for people and not only for stakeholders.

Please be very critical when reading such an article.

BTW: Airbus is still the biggest.

DFW · Post by **DFW** » 10 Nov 2006, 05:08

Hey, don't stereotype all Anglo-Saxons as free market extremists.

Actually, this article is typical of The Economist, and I wasn't giving it much trust. Still if the corruption accusations are true, then French prosecutors need to get involved.

David747 · Post by **David747** » 10 Nov 2006, 06:07

This is part of the problem with Airbus, and that is the politics behind the consortium, and some of the financial problems they are facing now. Of course, Airbus is not alone in this, and I have said before, Airbus needs clean up its act and rebound, just like Boeing has. Boeing faced the same problems in the late 1990's but they have rebounded nicely, now it is time for Airbus to do the same. But unlike the Economist, I'm optimistic about Airbus's future once they get their act in order. But for 2006, its been a bad year for Airbus.

airDD · Post by **airDD** » 10 Nov 2006, 07:50

Regretfully, the A380 is taking Airbus down; airbus would not have started the project if governments were not providing interest free loans for the A380 project.

I know the Economist is extreme free-market oriented and anti-French,
but maybe old sclerotic Europe can learn a few things from the Anglo-Saxons and ease off government interventions from time to time...

ElcoB wrote:Yes it is bad for stakeholders their profits in the short term, I agree.
But in Europe we have wages, lay-off conditions, healthcare provisions and pension regulations no heard of in the USA. .

As a Belgian who left the European "Paradise" for the USA, the above mentioned things are not as bad as you think

Post by **ElcoB** » 10 Nov 2006, 13:49

airDD wrote:........ old sclerotic Europe ..................

And WTF you mean by this ?
Look at the big EU-carriers versus US-carriers, which ones are sclerotic?

smokejumper · Post by **smokejumper** » 10 Nov 2006, 16:24

The issue of state ownership and funding (IMO) was decided in 1989 with the fall of the Soviet Union and its' satellites. It just does not work.

I have visited former Soviet factories and companies as a hired consultant to advise them on market transition to a free economy and found that the planned economy wasn't. In one factory (a former tank factory), the plant management wisely asked the question, "What can we make using the materials we have on hand". They had plenty of steel and electrical wiring, so they concluded, "Let's make irons to iron clothes".

They made high quality irons, but had no way to get printed cardboard boxes to ship them in and had no marketing experience to sell them. The irons were just piled on one side of the plant. This was a real tragedy as materials and talent were wasted because they had no market experience due to the previous state ownership and planning. Make no mistake, there were very intelligent and gifted managers and workers; they did a good job, but were adapting to new conditions and experiences.

The free-market system may be brutal, but it brings out a high level of responsibility since the consequences may result in collapse.

Airbus was planned to combine the "best" of state control (financing) and private sector experience. They had success with the A300/320/330, but the A340/380 results have certainly hurt them. I'm afraid that state direction will ultimately prevail if the company is to last.

cageyjames · Post by **cageyjames** » 10 Nov 2006, 16:51

ElcoB wrote:<snip>

The European press attacks Airbus and you still make the failings of the A380 all about America.

Look at the big EU-carriers versus US-carriers, which ones are sclerotic?

For every AF there is AZ. When I think of best best run airlines, they are in Asia and Arabia, not Europe or US.

Zenfookpower · Post by **Zenfookpower** » 10 Nov 2006, 19:42

ElcoB wrote:........................
But in Europe we have wages, lay-off conditions, healthcare provisions and pension regulations no heard of in the USA. Our governments, with all their faults, nevertheless take some care for people and not only for stakeholders..........................

..............BTW: Airbus is still the biggest.

If you like to bring the USA into the picture, then keep in mind that we all are in a GLOBAL economy which is mostly governed by Cut Throat business practices where governments can only sit on the side lines...health care provisions, pensions, 13th month pay, children allowances, 6weeks paid vacation etc... don't belong there anymore...hence they soon will become "memories" from the past...(for those economies who want to survive the onslaught of the developing countries)