Air­bus’ global re­struc­tur­ing drive aims to boost pro­file and com­pet­i­tive­ness

Avi­a­tion gi­ant hopes move will ben­e­fit he­li­copter, de­fense units

China Daily (Canada) - - BUSINESS - By LU HAOTING luhaot­ing@chi­nadaily.com.cn

Lau­rence Bar­ron is ex­hil­a­rated to have the Air­bus logo back on his busi­ness card.

The com­mer­cial lawyer­turned-avi­a­tion vet­eran, who served at Air­bus SAS for more than 30 years, was ap­pointed chair­man of EADS China at the be­gin­ning of 2013.

Like his pre­de­ces­sors, Bar­ron had to ex­plain to nu­mer­ous lo­cal gov­ern­ment of­fi­cials the na­ture of EADS — the par­ent com­pany of Air­bus, Euro­copter and the lesser-known space and de­fense tech­nol­ogy providers Astrium and Cas­sid­ian.

But that’s not the case any­more.

The Euro­pean aero­space gi­ant changed its name to Air­bus Group on Jan 1. By shed­ding the for­mer in­dis­tinc­tive cor­po­rate name to adopt that of its bet­ter-known pas­sen­ger air­craft di­vi­sion, the group hopes to boost its global pro­file and com­pet­i­tive­ness.

The group will also com­bine its space and de­fense en­ti­ties into one di­vi­sion — Air­bus De­fense and Space. Its he­li­copter busi­ness will be re­named Air­bus He­li­copters, while the com­mer­cial air­craft unit will keep the Air­bus name.

“We’re mak­ing our or­ga­ni­za­tion eas­ier to un­der­stand for our­selves and for the out­side world. And more im­por­tant, we will im­prove ef­fi­ciency and re­duce costs by mak­ing our or­ga­ni­za­tion leaner and cre­at­ing syn­er­gies be­tween di­vi­sions,” Bar­ron said.

The main cat­a­lyst for the re­struc­tur­ing project was the flat or even shrink­ing de­fense and space bud­get in Europe, which is forc­ing the com­pany to fo­cus in­creas­ingly on ex­port mar­kets and cre­ates an ur­gent need to im­prove ac­cess to in­ter­na­tional cus­tomers.

The re­struc­tur­ing project will re­sult in 5,800 job cuts at the de­fense and space di­vi­sion and cor­po­rate head­quar­ters in Europe by the end of 2016. No jobs will be elim­i­nated in China, Bar­ron said.

In China, the com­pany will move its he­li­copter and de­fense/space of­fices from the down­town area to the Air­bus cam­pus near Bei­jing’s air­port by the mid­dle of 2014. The three di­vi­sions will share cen­tral­ized ser­vices, such as fi­nance, HR and com­mu­ni­ca­tions.

“We will have a sim­ple struc­ture with one name, un­der one roof and shared ser­vices,” said Bar­ron, who per­son­ally started the re­lo­ca­tion project four years ago when he was Air­bus China pres­i­dent.

Glob­ally, Air­bus con­trib­uted about 70 per­cent of the group’s earn­ings, which stood at 56.5 bil­lion eu­ros ($77.66 bil­lion) in 2012. In China, Air­bus is even more dom­i­nant with a 97 per­cent con­tri­bu­tion to earn­ings.

De­spite huge po­ten­tial, China’s civil he­li­copter mar­ket is still fledg­ling. A ma­jor con­straint is airspace re­stric­tions and the re­sult­ing lack of air and ground ser­vices. The de­fense and space busi­ness is even more re­stricted due to the Euro­pean Union’s arms em­bargo on China and its con­trols on tech­nol­ogy ex­ports.

How­ever, Bar­ron ex­pects rev­enue from the he­li­copter di­vi­sion to in­crease sig­nif­i­cantly in com­ing years.

“The next 10 years for Air­bus He­li­copters in China will be a bit like the last 10 years for Air­bus. We ex­pect Air­bus He­li­copters to take a sig­nif­i­cant share in China, as we’ve seen tan­gi­ble signs of open­ing up the lower al­ti­tude airspace for gen­eral avi­a­tion,” Bar­ron said.

Chi­nese car­ri­ers now op­er­ate more than 1,000 Air­bus air­craft, ac­count­ing for 50 per­cent of the to­tal planes in ser­vice. The com­pany sold its first plane to China in 1985 — Boe­ing Co had a 13-year head start — and set up its Chi­nese sub­sidiary in 1994.

The Euro­pean com­pany has also sold more than 180 he­li­copters across the coun­try. Its rev­enue reached 90 mil­lion eu­ros in China in 2012, up 54 per­cent year-on-year.

The Civil Avi­a­tion Ad­min­is­tra­tion of China and the Peo­ple’s Lib­er­a­tion Army jointly re­leased reg­u­la­tions in Novem­ber stat­ing that gen­eral avi­a­tion flights that don’t af­fect na­tional se­cu­rity will now be sub­ject to ap­proval by the CAAC, not the mil­i­tary. That was con­sid­ered a ma­jor step to­ward open­ing up the na­tion’s low-al­ti­tude airspace. With the ex­cep­tion of some com­mer­cial air routes, the Chi­nese main­land’s airspace is un­der the ad­min­is­tra­tion of the Air Force.

Once the low-al­ti­tude airspace reg­u­la­tions are re­laxed, China could rapidly be­come the world’s largest he­li­copter mar­ket due to huge de­mand from sec­tors such as off­shore oil and gas ex­plo­ration and tourism.

China had 298 civil­ian he­li­copters reg­is­tered with the CAAC by the end of 2012, and the coun­try is ex­pected to have 1,500 civil­ian he­li­copters in the next 10 years, Xia Qun­lin, deputy gen­eral man­ager of Avi­copter Co Ltd, a joint ven­ture be­tween Avi­a­tion In­dus­try Corp of China and the Tian­jin mu­nic­i­pal gov­ern­ment, said at an in­dus­try fo­rum ear­lier this year.

PRO­VIDED TO CHINA DAILY

Air­bus He­li­copters’ dis­play at an avi­a­tion expo in Bei­jing in Septem­ber, when the unit was still known as Euro­copter. Air­bus hopes the name change will al­low it to cap­i­tal­ize on its brand recog­ni­tion as it at­tempts to ex­pand its mar­ket share in China.

Lau­rence Bar­ron, chair­man of Air­bus Group China

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