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Leahy delivers bad news

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Airbus’ top salesman, COO, customers, John Leahy, is more than familiar with the media limelight. But his typical role is to deliver good news of more aircraft orders; a role he handles with aplomb, often coupled with a sharp jab at Boeing.

Not so today. Airbus issued a short statement early this morning announcing that Emirates Airline had cancelled its order for 70 A350 XWBs. The size of the cancellation, the fact that the A350 is Airbus’ newest widebody, and because Emirates is a highly-regarded power player in the global airline market mean that even Leahy could not wrap this message in his usual bullish style. This is a serious blow to the manufacturer, no question.

The timing of the announcement was interesting, however. It came early on the morning of the first of two Airbus innovation days in Toulouse. An annual event, Airbus brings in journalists from around the world – there are some 150 reporters here this year – and its senior management briefs them on everything from aircraft program updates to new technologies and overall market status. Airbus president and CEO Fabrice Brégier hosts a dinner this evening and is expected to make some remarks and take a Q&A session.

Naturally, with the A350 heading to first delivery towards the end of this year, to launch customer Qatar Airways, this year’s program has a large focus on the aircraft’s flight test program.

So while Airbus clearly did not expect or want to open this event with bad news, ultimately the timing could be fortuitous for a number of reasons. First, Airbus has the world’s aviation media captive at its Toulouse delivery center, so it is in a position to handle the message and the questions directly. And Leahy did this with style, adapting his opening remarks to deal with the cancellation head on. It’s not the world’s greatest news, he admitted, but life goes on and the A350 program “is in great shape”.

Second, the innovation days’ program schedule includes a visit tomorrow to one of the A350 test aircraft and to meet with its pilots. There’s nothing like some hands-on show-and-tell  to maintain or even increase excitement about a new aircraft.

Finally – perhaps most important – Airbus had the chance to mitigate the shock of the cancellation order before the Farnborough Air Show that will take place in the UK in July. By then, this will be relatively old news and Boeing’s ability to play it up will be more limited. Many of the aviation journalists here in Toulouse will also be at Farnborough and they will already have had the Airbus viewpoint and the chance to get comment from Emirates.

So I fully expect Leahy to be back in his more usual role at Farnborough – delivering good news with a broad smile and, naturally, the occasional dig at his “friends in Seattle”.

Discuss this Blog Entry 5

on Jun 11, 2014

The message evokes memories of the MD 11, and SIA's verdict of it. I sure hope this same fate will not befall the A350.
It has challenges enough before it was re-launched as the XWB. The fact that recently one Airbus customer compared the A340-500 to the old B747SP does not help.

on Jun 11, 2014

Maybe Boeing's sales meeting with EK about a week ago involving the 747-8I might be connected with today's A350 cancellation and as slim as it seems, perhaps some 747-8I's might be ordered after all.
No long lead times, some good pricing might do the trick.

on Jun 11, 2014

Nice spin, Karen --- like an out-of-balance turbofan or an off-kilter washing machine. Leahy knows that not only has a battle been lost (w/ regards to this particular order per se) but something of a war's been lost as well --- to Boeing and its B777X alongside its 787s too. Those a/c look to do more than just dent the wanna-be A350 series over time, although perhaps not to the extent that the 777 pretty much killed off the slothy A340. Leahy's not an idiot; he knows all of this and it hurts --- especially when one's the egomaniac that he clearly is.

on Jun 12, 2014

Well, you win some, you lose some..

Much as Airbus may remain nonchalant about the cancellation, they must be smarting under the skin with this blow to the A350 program. How effectively Toulouse handles the aftermath of this development will be interesting to observe.

As Karen has rightly commented, the sheer number of the cancellation and that too coming from the likes of Emirates is certain to prompt boardrooms of current and may-be customer airlines to sit back and take stock of the move.

Attributing the cancellation to efforts by Boeing to push the 747-8I remains pure conjecture. The Emirates management is perhaps keen to ensure that, commensurate with the new order for the A-380, the eggs mustn't all be piled in the same basket, so to speak.

There remains little doubt the A350 will be a class performer, given the fact that Airbus has had a chance to observe the teething issues with the 787 and iron out any similar wrinkles in the 350.

Let's sit back and watch...

on Jun 12, 2014

Good and wise comment Rirahom; thank you!
K

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