Sunday, June 18, 2006

Airbus fallout roundup, France and Germany collide

Bidness: Let the blame game begin!

A YEAR ago the Airbus A380 Superjumbo soared into the skies above Toulouse on its maiden flight. Down below, Tony Blair, President Chirac, Gerhard Schröder, then the German Chancellor, and thousands of onlookers hailed the world’s biggest passenger jet as an emblem of European integration. But today the A380 has become a symbol of all that is wrong with Europe — incompetence, misplaced ambition, greed and bickering. Far from uniting Europe, it is driving a wedge between France and Germany, with Berlin complaining of the French penchant for state intervention and cronyism, and Paris debnouncing Germans’ stiffling desire for concensus. With executives and industrialists facing a series of investigations into the events that made them richer — and ordinary shareholders poorer — the aircraft has also propelled its manufacturer into the greatest crisis of its history.
Meanwhile, Airbus will be looking to a couple of state sugar daddies to bail them out.
Facing mounting problems over its inability to deliver the A380 superjumbo plane on time, Airbus looks set to request state aid for the development of a troubled midsize jetliner in what some analysts described as a rescue package. Meanwhile, the German co-head of the parent company EADS warned on Sunday of broader consequences from the latest "crisis" at Airbus. A move toward development loans from governments, or so-called launch aid, for the midrange A350 jet would almost certainly worsen a bitter trans-Atlantic dispute over the different forms of government support received by Airbus and its American rival, Boeing. European governments have been signaling that such aid would be forthcoming, even as the U.S. trade negotiator warned last week that the move could lead to a full-scale battle at the World Trade Organization.
Boeing is trying to keep a level head about these developments.
In the race for supremacy in the global passenger-jet market, Boeing Co. is gaining quickly, but its pilot wants to keep company's attitude grounded. "Only the paranoid survive," said Boeing's chief, James McNerney, borrowing the famous line from former Intel Corp. Chief Executive Andy Grove. "It's my job to keep everybody paranoid." It's hard to stay humble when the stock price jumps 32 percent in your first year at helm. Especially when, during the same period, the company's new airplane, the 787 Dreamliner, has sold like a dream come true. Then there's the icing: Archrival Airbus SAS is living a nightmare of delays and setbacks. Still, McNerney is keeping his enthusiasm in check, at least publicly. "The business equation is pretty strong right now," he said in his typical understated manner in an interview with the Chicago Tribune last week.

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