Recent airplane production delays, the resignation of a pair of top executives and competition from Boeing have seen Airbus shares plunge. However, the manufacturer is moving forward as it undertakes the second half of 2006.
On Monday, the Airbus division of the European Aeronautic Defence and Space Co. announced that it had received orders for 117 planes during the first six months of 2006, a figure that pales in comparison with that of its American competitor Boeing, which had previously reported that it had secured 480 orders during the same time period.
The latest numbers could be a reflection of several challenges the company is facing.
Just last week EADS ended a brief but turbulent period where the companyâ€™s co-CEO and the head of Airbus unit departed following the announcement of inevitable delays in the manufacturing of the flagship A380 super jumbo jet.
The 555 passenger giant is meant to be the plane that ushers in a new era of air travel, surpassing the 30 year reign of Boeingâ€™s 747 as the worldâ€™s largest commercial jet.
On June 13, the Airbus blindsided investors and shareholders when it announced that it would delay the delivery of A380 by up to seven months due to electrical wiring difficulties. The added delay put the jet over a year behind schedule. Meanwhile, customers who had already ordered jets announced the same day they would be reviewing their options with some saying they would seek compensation.
In the June 14 trading session, the companyâ€™s stock plunged 26 percent, wiping out over $7 billion in EADS valuation.
The question of which executives knew about the delay and when they knew it arose. In the aftermath of several weeks of intense speculation and a desire to see someone held accountable, Airbus head Gustav Humbert and EADS co-CEO Noel Forgeard resigned, on July 3, saying that they were taking responsibility.
For the departing Forgeard, who said he already knew there was a risk of delay in April, it was a sad exit following nearly a decade at the company. He was known as the father of the A380 because the drive to create it came under his watch as CEO of Airbus.
Another of the major difficulties facing the company has been customer dissatisfaction with designs for the 300 passenger A350 jet. The A350 is meant as a medium-sized, long distance option for airlines. It has been criticized for being fuel inefficient.
Boeingâ€™s 787, known as the Dreamliner, is the A350s closest competitor. It touts lightweight building materials and more efficient engines. While Boeing has secured a total 360 firm orders for the plane, the Airbus counterpart has only 100 confirmed.
When the complaints were first made, executives at Boeing said that a decision on whether the A350 needed a redesign was going to be made by July. With the recent management shakeup, those plans may be placed on hold.
New Airbus Chief Executive Christian Streiff, who was confirmed by shareholders last week, could decide about the fate of the A350 by next weekâ€™s Farnborough International Air Show near London.
Time is a factor. The Boeing jet is scheduled for its first delivery by 2008, with consistent production in place by 2010. A significant redesign of the A350 could delay production until 2012.