MIAMI – During the Atlantic Council Forum on EU and US’ future, held from May 3 to May 7, Frederick Kempe, Atlantic Council CEO, and Guillaume Faury, Airbus CEO, engaged in a conversation that covered key trade and economic recovery subjects such as the pandemic crisis, the trade dispute with Boeing, a new Chinese rival in the aviation industry, a critical chain of supplies, and hydrogen planes.
On the Global Crisis
Guillaume Faury points out the “brutal reality” with the majority of aircraft being grounded because of the Covid-19 crisis, the biggest ever crisis for the aviation world, that hit Airbus and its supply chain at a moment where activity was being “ramped up”. As a consequence production was reduced by 40%, the supply chain had to be re-organized and deliveries adapted to the situation.
Airbus CEOb speaks of “a hell of a lot of work” to try to adapt and, at the same time, protects employees and find new ways to produce aircraft under the contraints imposed by the Covid-19. He also add that a lot of money was lost in the first half of the year (2020) but the situation stabilized and “we were making money” in the fourth quarter 2020 and this continued in the first quarter of 2021.
This was done done by reducing expenses and workforce. Airbus is now “prudently looking at the end of 2021, 2022” with the aim of increasing production of narrow bodiesv – the single-aisle type – while long range aircraft and long haul airlines business will take longer to pick up because of different ways each country has in managing the present situation.
On the Way to Normality
Guillaume Faury praises the “sentiment of optimism” in the US and points out that this is due to an efficient and fast vaccination campaign and hopes that others will follow the example, particularly Europe which started later and is facing issues in coordinating with other countries but is also showing strong progress at the same time.
“When the vaccination campaign starts to reach a certain point, then the contamination goes down. The economy can reopen. Activity can start again” says Guillaume Faury hoping that Europe will follow the US way and pave the way for a “good summer”, the re-opening of businesses, and allow people to live again. And, Airbus CEO points out, the vaccination campaign is the way to get there, because when we look at the US that’s the case.”
On the Boeing vs. Airbus trade dispute
The Airbus CEO sees the aviation business as “a mainly North Atlantic ecosystem” where commercial exchanges are crossed with each side buying or selling to the other with Boeing and airbus contributing to it. In a small ecosystem, trade barriers make no sense and they finally evolve into a no-win situation.
The recent decision to put a temporary stop on tariff disputes is a good start but Guillaume Faury thinks that a final solution must be foundn this being in the interest of the US, Europe, Boeing, and Airbus. And Faury adds : “And it will allow us to address other challenges, other players, newcomers that come also with some strong support from their states”.
On the Chinese Rivalry
COMAC, Commercial Aircraft Corporation of China, is developing a single-aisle aircraft, the C919, a competitor for Airbus and Boeing, due to start service at first with domestic Chinese airlines, probably in 2022/2023 and impact a market that represents for Airbus a 20% of its global commercial aircraft business.
At present, the Chinese market is shared between two entities, Airbus and Boeing, both for the single-aisle and widebodies types but Guillaume Faury says “We believe this will progressively become a decent player. So we will grow probably from a duopoly to a triopoly, at least on the single-aisle, by the end of the decade. Chinese markets, even with this new player, will continue to be for Boeing, for Airbus a very important market to address”.
On the change from a “duopoly” to a “triopoly”, Guillaume Faury says “That’s not—that’s not an unlikely scenario. It’s still difficult to say at what stage and what level of competitiveness COMAC will be able to introduce the 919 in the market. We believe they will start with China because the Chinese airlines are state-owned companies and it’s easier to do it. It takes a lot of time to demonstrate the maturity of a product, to make it reliable, trusted, and economically viable. But we believe it’s not unlikely on that on the single-aisle by the end of the decade COMAC will have taken a certain share of the market”.
On the Supply Chain
Taking example on the difficulties faced by the automobile industry that is facing a critical shortage of semi-conductors to the point to be obliged to revert to old analogic systems, Guillaume Faury indicates that Airbus is looking at the situation very seriously and has set up “watchtowers” to have transparency and anticipation on the evolution in supplies so to avoid situations similar to the one which is affecting the car industry.
But he also adds, “I remain humble because things can change very quickly. We’ve seen that what happened in the car industry was not on the radarscope a couple of months before it happened. That’s why we have the watchtowers and we are trying to anticipate as much as we can, gaining visibility. But again, prudently, I can tell you today we don’t see a similar situation in aviation, at least not for the moment, and I hope it will stay like this”.
On “Green Aircraft”
Airbus has recently made an announcement on the role that hydrogen will play in air transportation with a possible full hydrogen aircraft to fly by the 2035 horizon. On this subject, Guillaume Faury points out the engagement by Airbus towards the environment, particularly in present times, and the urgency brought forward by climate changes and global warming.
In the short-mid term, the solution lies with sustainable aviation fuels (SAF), and Faury says “together with the airlines—I think together with Boeing, by the way, on that front—we believe the SAFs are the avenue for the next years”. But Airbus CEO thinks this is a temporary solution that must be followed by a carbon-free aircraft and hydrogen is the solution.
Faury points out the development of hydrogen technology in other fields such as transportation, cars, rockets or satellites and sees “a convergence” and “a strong opportunity” and “that’s why we’ve put the hydrogen plane very high on our agenda.”
On this subject, the Airbus CEO adds “we think that’s a fantastic opportunity for the long term to have aviation not only—being the only mode of transport to not impose anything on the ground. You don’t need infrastructure on the ground. You don’t need to damage the ecosystems on the ground. You fly in the air. But on top, not releasing carbon in the air.”
Featured image: Airbus Flag – Photo: Airbus Media