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Friday, May 1, 2009

THE WORLDS BIGGEST AIRBUS A380

EADS, the European aerospace and defence group, this week saw its hopes that it had emerged from more than two years of nightmare turn to dust. The decision by the French market regulator, AMF, to charge it and 17 executives for insider dealing and misleading the market shatters its dream of slowly if painfully regaining some stability.

The group, owners of Airbus, has achieved some notable progress in its turnaround plans since it was almost torn apart by Franco-German infighting worthy of the House of Atreus. The company has been quietly celebrating a management truce that has installed Louis Gallois, a politically savvy operator and proven business leader, as sole chief executive while Tom Enders, a German, runs Airbus before, presumably, replacing Gallois when the Frenchman retires.

The new team, by all accounts, works well. Airbus has survived the long delays to its A380 superjumbo which is now in commercial service and is winning a spate of orders from under the nose of arch-rival Boeing which is now struggling with technical problems with its best-selling 787 Dreamliner that are also causing delays.

Last month EADS overcame fierce American resistance to the French and, deservedly, won a $35bn order from the Pentagon to provide new air-to-air refuelling (tanker) planes for the US Air Force and followed this up by sealing a £13bn contract to supply tankers for the RAF.

Its US victory, orchestrated by North American CEO Ralph Crosby with a small but highly effective lobbying team, should have ensured its ultimate breakthrough on to the American military procurement market and helped reach the goal of 10% of sales and profits from defence. It helped ease the pain caused by the dollar at an all-time low of (almost) $1.50 to the euro - and by hiccups in the sale of three German Airbus plants (but not Filton, near Bristol, which GKN is buying).

But, now, with the AMF charges, EADS faces at least two substantial new hurdles in its turnaround. The first is that, while Gallois has said the group and the executives affected will now "at last" have the chance to defend themselves at the AMF's sanctions committee, this will take up an enormous amount of management time, energy and effort - and put the group's own neck on the line.

The second is that, as he said, the proceedings may not carry material financial risk (though even that is debatable) but will have "significant consequences on its image and reputation". Not least in the US, Louis! Boeing has already lodged a formal appeal against the Pentagon decision - one it was unlikely to win but any suggestion that EADS or its executives, including Crosby, indulged in insider dealing could buttress its case and conceivably reverse the Pentagon's decision.

Siemens, the German technology group beset by bribery scandals, is terrified stiff that the SEC will hand out a multibillion fine and damage its highly profitable US business (and is in effective plea-bargaining talks while cleaning up its past). American regulators come down hard on any whiff of corruption.

The EADS executives, including Crosby, deny that they were privy to insider knowledge when they cashed in stock options in the months when the A380 problems were coming to light - and before these were made known to the public in June 2006, prompting the share price to collapse by a quarter in one day. Noel Forgeard, sacked as co-chief executive, affirmed his innocence in an interview with Le Parisien on Wednesday while admitting it was a mistake, with hindsight, to have netted millions for himself and his family.

Forgeard now says the "complex shareholder structure" at EADS ensured there could be no agreement within the boardroom to give misleading information to the market. Damaged or unscathed, EADS - and its key shareholders, the French state, Lagardère and Daimler - should now accelerate plans for them to exit the company and turn it into a normal company. They can't wait until next year or 2010.

SINGAPORE - The world's largest passenger jumbo jet, the Airbus A380, is on its way to Sydney as it completes the final leg of its inaugural commercial flight.

Singapore Airlines flight SQ 380 is expected to arrive at Sydney Airport around 1730 AEST, although thunderstorms and bad weather could delay the arrival.

The giant double-decker aircraft, which can carry a maximum of 850 people, was officially launched by Singapore Airlines chief Choo Choon Seng in a pre-flight ceremony at Changi airport today.

"This is a new milestone in the timeline of aviation," the Singapore Airlines chief said.

"It is the first big aircraft to be designed and built since the Boeing 747."

Passengers aboard the flight include 38-year-old Sydney resident Julian Hayward who paid $US100,000 for a first seat and American Thomas Lee, who was also aboard the inaugural Boeing 747 flight in 1970

Tough targets for SAP successor

Well, it's all change in Walldorf, the small town near Heidelberg, where SAP, the world's biggest business software company set up by ex-IBM executives 35 years ago, has its domain. Henning Kagermann, the former physics professor into heavy metal, is to step down as CEO next year.

Kagermann, who joined SAP in 1982, becoming sole chief executive in 2003, had once groomed Shai Agassi, an Israeli, to be his successor. But Agassi, put in charge of software development three years ago, quit last year and has now teamed up with Renault to make electric cars in his native country.

The management reshuffle sees Leo Apotheker, the Paris-based marketing chief and deputy chief executive, step up to be co-CEO before succeeding Kagermann in 2009. The moves, endorsed by chairman and co-founder Hasso Plattner, who, with two colleagues, owns 30% of the company, are said to signal a shift towards sales and marketing - with a corresponding downshift in development.

Kagermann, who told me in an interview three years ago he wanted to take on and beat Microsoft, has set a target of doubling customer numbers and value by 2010 - tough goals to hand over to Apotheker who will be the company's first CEO without a degree in computing and will be operating in an economic environment some have compared with the dotcom bust of 2002.

Imagine having a huge house party, cavorting in the sitting rooms, bouncing on the big beds and splashing in the showers 35000 feet in the air. That is exactly what Lufthansa Technik , the luxo-sport decorating and customization arm of the fabled German airline has in mind for the VIP saloon on the Airbus A380 which is meant for bailed out bank billionaires and zillionaires. A gorgeous group of unreal renders portrays what the good life must be like in the proposed VIP saloon while all those "little people" sit in their conventional chairs.