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Power8 Prepares Way for Airbus

07 March 2007

Airbus has presented the details of its Power8 restructuring plan to the Airbus European Works Council and announced the creation of a new industrial and operating structure for the company.

Airbus say that Power8 will enable them to face the very substantial challenge of the US dollar weakness, increased competitive pressure, the financial burden related to the A380 delays as well as meet its other future investment needs. Power8 provides for strong cost-cutting measures, aims at transforming the Airbus business model and the development of a global network of partners. It will allow Airbus to devote its resources to core activities and eliminate inefficiencies within its current structure. The programme aims at the full industrial integration of Airbus by establishing a new industrial organization with transnational Centres of Excellence replacing the existing national structures. This transformation will happen progressively over several years and includes the further extension of Airbus' global footprint.

A large part of the cost savings will be achieved through reducing the total Airbus overhead workforce (including temporary and on-site supplier workforce) by 10,000.

In the future, Airbus will focus on core business activities that are critical for the integrity and safety of the aircraft, or vital for technological and commercial differentiation, for the operability and reliability of the aircraft and its maturity at entry into service. These activities include overall aircraft and cabin architecture, systems integration, as well as the design, assembly, installation, equipping, customization and testing of major and complex components or manufacturing of new technology parts.

This core activity focus will be implemented in the make or buy strategy adopted for the A350 XWB. About 50 per cent of aerostructure work will be outsourced to risk-sharing partners. This is proportionally about twice as much as in earlier programmes. The workshare responsibility for the development of the A350 XWB will be split equitably among the founding nations with about 35 percent for Germany and France, 20 per cent for the UK and 10 per cent for Spain.

Airbus will restructure its industrial set up and establish in the coming years a long-term oriented network with strong partners. This will allow Airbus to share development costs as well as engineering resources.

""We will turn Airbus into an extended enterprise. The A350 XWB will draw on this new business model, as we assign large work packages to Tier 1 suppliers in return for a better distribution of future investment, risks and opportunities, with a consolidated supply base,"" Mr. Gallois, Airbus President and CEO, said.

Airbus is considering industrial partnerships at its plants in Filton, Meaulte and Nordenham, in order to facilitate their development from metallic to composite design and manufacturing technology. The company has already received unsolicited proposals by potential industrial partners ready to invest in these sites and to possibly take partially or fully the control of them in the framework of the extended enterprise concept.

The A350 XWB will be assembled and receive its interior furnishing in Toulouse, in the same facilities as the current A330/A340.

Concluding his comments, Louis Gallois said: ""None of these changes will be easy, but they are essential to securing the future of Airbus as a world-leading aircraft manufacturer for the long-term, and a business of which all its stakeholders can be rightly proud.""