Posts: 101
Joined: Fri Jun 10, 2005 8:16 am

Who Will Supply The Parts For Airbus?

Tue Nov 07, 2006 3:34 am

"PARIS (AFP) - European aircraft maker Airbus plans to reduce by 80 percent the number of subcontractors used by the company as part of a vast restructuring plan aimed at reducing costs, a company spokesman said.

The number of subcontractors is to be cut from nearly 3,000 to about 500, the spokesman said, confirming a report in the Financial Times Deutschland published on Monday.

The group, based in Toulouse, southern France, also plans to cut its administrative costs by 900 million euros (1.14 billion dollars) in total by 2010 and its supply costs by 350 million euros over the same period, the spokesman said.

He added that the number of logistics facilities used by the company would be reduced from 80 to between four and eight.

Airbus announced in October that it planned to implement a cost-cutting program to compensate for the financial strain caused by delays to deliveries of its sumperjumbo A380 plane.

The A380 program is two years behind schedule and has suffered from higher costs as a result of wiring difficulties in the giant aircraft, which are capable of carrying up to 840 passengers and are set to become the biggest civilian jetliners in the world when they enter service.

Airbus has sharply revised down its profit targets for the A380 project, saying it will now have to sell 420 planes to break even instead of 270 as previously announced."

Not being an aviation industry insider, I am curious how Airbus will acquire the parts made by the sub-contractors they are cutting off. Also, is Airbus inviting lawsuits by said contractors for breaking off production agreements, that is if they are terminating the contracts early? My guess is that either they have already negotiated settlements already or the contracts have expired. Right? Wrong?
Posts: 2128
Joined: Wed Apr 20, 2005 12:34 am

RE: Who Will Supply The Parts For Airbus?

Tue Nov 07, 2006 3:54 am

Their idea is that Airbus would purchase more completed assemblies, instead of buying the parts and assembling them. The current component suppliers would supply the company making the assemblies for Airbus.

There would not be any long term problem with the Airbus purchase contracts as these are not usually multi-year contracts, but rather simple purchase orders.