Airbus puts supply chain executive at helm of loss-making A220

1:06 pm Monday, May 10th, 2021

By Tim Hepher

PARIS (Reuters) – Airbus has appointed a senior internal supply chain executive to run its Canadian operation, with responsibility for trimming losses on the A220 jetliner series, in the latest in a series of management changes at the European aerospace group.

Benoit Schultz, 48, will take over on Sept. 1 from Philippe Balducchi, a former finance executive who became the first head of the Canadian venture when Airbus bought the CSeries jet programme from Bombardier in 2018 and renamed it A220.

Schultz, who was part of the team that ran a ruler over Bombardier’s supplier relationships when Airbus rescued it from cash shortages, is currently a senior vice president in the Airbus procurement office, which runs its global supply chain.

He steps up as Balducchi plans to “pursue opportunities” outside the group after integrating the former Bombardier plants into Airbus and opening a new U.S. assembly line, Airbus said. The Canadian-designed A220, with 110-130 seats and a modern lightweight design, has seen a boost in sales under Airbus after its development took a heavy financial toll that triggered Bombardier’s near-total exit from the aerospace market.

It has notched up more net orders so far this year than any other Airbus model as airlines seek to reduce fuel costs and favour smaller aircraft in the wake of the coronavirus crisis. But while sales have benefited from the stronger Airbus marketing machine, industry sources say the European group has yet to secure low enough prices for many of the plane’s components to push the A220 project convincingly into the black.

That creates a growing dilemma for Airbus as although new sales are good for the order book, producing those extra planes at costs that remain too high could simply deepen the losses. Airbus Chief Executive Guillaume Faury has been seeking cuts of 20% in the cost of major components, industry sources say. One source said Airbus had obtained solid cuts from dominant suppliers Raytheon Technologies – which makes engines and avionics – and wingmaker Spirit Aero Systems but was still struggling to make a significant dent in most other costs.

Airbus could further reduce costs by redesigning parts and overhauling the production system for the A220, which competes with Embraer regional jets and smaller Boeing 737s, but such spending is seen unlikely during the pandemic.

Airbus had no immediate comment on cost-cutting efforts.

(Reporting by Tim Hepher; Editing by Edmund Blair and David Clarke)