Airbus Is Reviewing Its Jetliner Plants in Push to Slash Costs

(Bloomberg) -- Airbus SE is reviewing its jetliner factories across Europe as the group looks to trim costs and simplify a convoluted industrial structure resulting from its formation via a merger of national players.

The study, led by new commercial-aircraft Chief Operating Officer Michael Schöllhorn, will examine plane-building activities in France, Germany, Spain and the U.K. with the aim of making them more efficient and identifying surplus operations, people with knowledge of the matter said.

The review may result in restructurings, small disposals, or work being shifted to other locations, said the people, who asked not to be named discussing internal matters. They didn’t say whether a timetable had been set.

Airbus, formed through an amalgamation of European planemakers in 1970, has made increased efficiency a top priority under Chief Executive Officer Guillaume Faury, who took over in April. The structure was formalized in 2000 and Airbus, based in Toulouse, France, now builds jetliners at final-assembly plants in half a dozen countries including China and the U.S., with significant operations elsewhere like its U.K. wing production. That compares with three major plants in two American states at arch-rival Boeing Co.

“Boeing has more cost effectiveness than us and we need to address that,” Faury said at the Paris Air Forum on Friday. 

Schöllhorn, 53, took over as COO at Airbus’s commercial aircraft arm on Feb. 1 after 20 years at German auto-parts and appliance specialist Bosch Group, including as executive vice president for manufacturing and quality.

Juggling Act

An Airbus spokesman directed Bloomberg to Faury’s comments following Schöllhorn’s appointment, which emphasized his experience in digitalization, process optimization, manufacturing, quality and supply-chain management. Faury said at the time the new recruit would help reach “the next levels of production efficiency.”

The split of work between factories has long been a juggling act for Airbus, given the French and German states are both major shareholders. A plant in Hamburg, for example, delivers the double-decker A380 to clients in Europe and the Middle East, while Toulouse hands the plane over to buyers from other regions.

While record order backlogs mean there’s no shortage of work, the jetliner industry has also been ramping up output to levels where consolidation of production might allow it to achieve the economies of scale seen in higher-volume sectors such as automobile manufacturing.

Factories have also become a tool for spurring sales, with one in Tianjin, China, strategically located to encourage orders in what is set become the world’s largest travel market. Another in Mobile, Alabama, has served to counter sensitivities surrounding U.S. carriers buying planes from the European company over Chicago-based Boeing.

That makes Airbus’s European plants more vulnerable to rationalization. Executives have already said that U.K.-based wing construction could be jeopardized by Brexit, though the company has no comparable facilities elsewhere and a shift would require significant investment.

To contact the reporter on this story: Benjamin Katz in London at bkatz38@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Benedikt Kammel

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