Airbus Operations Management Analysis

1 January 2017

It is perhaps inevitable that a major new and complex product like a passenger aircraft will experience a few problems during its development. But the history of the Airbus A380 was a long and incident packed journey from drawing board to reality that illustrates the dangers when the design activity goes wrong. This is the story in brief. 1991 – Airbus consults with international airlines about their requirements for a super-large passenger aircraft.

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Airbus rival Boeing says it has begun studies into ‘very large’ commercial aircraft. June 1993- Boeing decides not to go for a super-large passenger aircraft, but instead to focus on designing smaller ‘jumbos’. Airbus and its partners set up the A3XX team to start the ‘super jumbo’ project. 1996 – Airbus forms its ‘Large Aircraft’ Division. Because of the size of the aircraft, it is decided to develop specially designed engines rather than adapt existing models. 2000- The commercial launch of the A3XX (later to be named the A380) 2002- starts on manufacturing the aircraft’s key components.

This causes turmoil in the boardrooms of both Airbus and its parent company EADS. The company’s directors are accused of suppressing the news for months before revealing it to shareholders. It leads to the resignations of Gustav Humbert, Airbus’ Chief executive, Noel Forgeard, EADS co-chief executive, and Charles Campion, the A380 programme manager. October 2006- Airbus infuriates customers by announcing yet a further delay for the A380, this time of a whole year. The first plane is now forecast to enter commercial service around twenty months later than had been originally planned.

The delays will cost Airbus another estimated ? 4. 8 billion over the next four years. The company announces a drastic cost-cutting plan to try to recoup some of the losses. The Power8 programme is intended to ‘reduce costs, save cash and develop new products faster’. It wants to increase productivity by 20% and reduce overheads by 30%. October 2007- The supper-jumbo eventually takes off in full service as a commercial airliner for Singapore Airlines. It wins rave reviews from both airlines and passengers – even if it is two years late.

So what caused the delays? First, the A380 was the most complex passenger jet ever to be built. Second, the company was notorious for its internal rivalries, its constant need to balance work between its French and German plants so that neither country had too obvious an advantage, constant political infighting, particularly by the French and German governments and frequent changes of management. According to one insider, the ‘underlying reason for the mess we were in was the hopeless lack of integration [between the French and German sides] within the company’.

Even before the problems became evident to outsiders, critics of Airbus claimed that its fragmented structure was highly inefficient and prevented it from competing effectively. Eventually it was this lack of integration between design and manufacturing processes that was the main reason for the delays to the aircraft’s launch. During the early design stages the firm’s French and German factories had used incompatible software to design the 500 km of wiring that each plane needs. Eventually, to resolve the cabling problems, the company had to transfer two thousand German staff from Hamburg to Toulouse.

Processes that should have been streamlined had to be replaced by temporary and less efficient ones, described by one French union official as a ‘doit-yourself system’ Feelings ran high on the shop floor, with tension and arguments between the French and German staff. ‘The German staff will first have to succeed at doing the work they should have done in Germany’, said the same official. Electricians had to resolve the complex wiring problems, with the engineers having to adjust the computer blueprints as they modified them so they could be used on future aircraft. Normal installation time is two to three weeks’ said Sabine Klauke, a team leader. ‘This way it taking us four months. ’ Mario Heinen, who ran the cabin and fuselage cross-border division, admitted the pressure to keep up with intense production schedules and the overcrowded conditions made things difficult.

‘We have been working on these initial aircraft in a handmade way. It is not a perfectly organised industrial process. ’ But, he claimed, there was no choice. ‘We have delivered five high-quality aircraft this way. If we had left the work in Hamburg, to wait for a new wiring design, we would not have delivered one by now. But the toll taken by these delays was high. The improvised wiring processes were far more expensive than the planned ‘streamlined’ processes and the delay in launching the aircraft meant two years without the revenue that the company had expected.

But the Airbus was not alone. Its great rival, Boeing, was still having problems. Engineers’ strikes, supply chain problems and mistakes by its own design engineers had further delayed its ‘787 Dreamliner’ aircraft. Specifically, fasteners used to attach the titanium floor grid, to the composite ‘barrel’ of the fuselage had been wrongly located, resulting in 8,000 fasteners having to be replaced.

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