Report Says A380 Was A 'Catastrophe'

A report by French senators about Airbus' parent company, EADS, concluded bad management and too much autonomy, among other things, were to blame for rival Boeing moving to the top spot of dominant aircraft manufacturers.

French senators Jean-Francois Le Grand and Roland Ries have been investigating the company for the past six months and recommended a bigger role Wednesday for French and German governments in it decision making process, according to Associated Press.

The senators cited excessive autonomy, a "clumsy" management structure and lack of surveillance by shareholders DaimlerChrysler AG and Lagardere Groupe SCA for problems with the A380.

"The A380 was a catastrophe, both industrially and commercially," Ries said. "We have to put an end to this management system."

The report's conclusions are considered strong but non-binding advice not only to EADS, but the French and German governments as well.

Le Grande also said part of the overall problem was "the competition" between former EADS executives Noel Forgeard and Philippe Camus distracting them from the company's problems. Ries agreed and said the power struggle caused technical difficulties with the A380 to be overlooked.

The senators said EADS needs to concentrate on the A350 XWB, which was redesigned last year, or its best-seller, the A320.

Another factor the senators cite as a source of trouble is the company's unusual structure. The French government owns 15 percent, Lagardere Groupe SCA holds 7.5 percent and Stuttgart, Germany-based DaimlerChrysler holds 22.5 percent. DaimlerChrysler cut its stake in the company by a third in February.

Then there's the problem with currency. The plane maker prices its product with the US dollar, which is in a real slump and has been for awhile. But, pays its costs in Euros, which is on the rise.

The senators did support Airbus' massive restructuring plan that was introduced in February. The plan, known as Power 8, saves an estimated $2.6 billion a year by trimming more than 10,000 jobs and other cost cutting measures, as ANN reported.

Le Grande also urged European governments to funnel more money into aerospace research and technology, as the US does.

FMI: www.eads.com, www.airbus.com, www.senat.fr/lng/en