AIRBUS Crisis - Delay in A380

AIRBUS A380 is considered to be the most ambitious project in the aircraft manufacturing space. The project A380 is a very well known Harvard Business Case Study and is one of the best examples of Project Finance. A380 from AIRBUS is answer to the Boeing's growing dominance in the aircraft manufacturing space. I read the case study of A380 in TAPMI. It was a very interesting one although the calculations involved were not that easy to replicate in the exam. But unfortunately AIRBUS is in deep trouble because of the considerable delay it is facing in the commercial launch of its superjumbo A380.

Recently when the superjumbo A380 took its first maiden test flight, the historical event also coincided with the replacement of the head of its delayed Airbus A380 program. Frenchman Charles Champion, once touted as a potential chief executive, is the third official to lose his post after delays in assembling the world's largest airliner forced the resignation of the company's chief executive and the co-head of parent EADS during a corporate crisis in July.

Champion paid the price for failing to inform the Airbus board on time of the superjumbo's mounting technical difficulties, and for allowing severe production bottlenecks to continue unchecked for months, rather than fix them immediately. Mario Heinen, a 50-year-old executive from Luxembourg, who until now has been in charge of the European planemaker’s chief cash engine, its single-aisle range of A320-family jets, has replaced Champion.

Heinen's first task will be to ensure that there is no further slippage in deliveries, with Airbus already facing penalty payments to airlines over previous delays. Airbus said it is on schedule to deliver the first finished A380 to Singapore Airlines Ltd. by the end of 2006 after two sets of delays totaling a year. Airbus has admitted that it will deliver only nine next year, instead of the promised 25, up to nine fewer in 2008 and five fewer in 2009.

For the first time, the A380 took to the sky with company employees for the test lasting seven to 15 hours. The A380, the world's largest passenger jet, took to the sky with 474 Airbus employees on board for the first of four test sorties known as "Early Long Flights" lasting seven to 15 hours on Monday. The plane, powered by four huge Rolls Royce engines, returned to its Toulouse base Monday evening after a fully crewed flight in which the Airbus staff was served drinks and meals. Capable of carrying 555 people in standard three-class layout, or over 800 in all economy, the A380 is billed as the industry's answer to airport congestion and rising air traffic.

Laloo to teach @ IIM Ahmedabad

Laloo Prasad Yadav one of the favorite in the Gustakhi Maaf series and also the one whom Shekhar Suman imitated very well is now having the last laugh. After making Bihar, the worst state of the country, he has just done the opposite for the Railways. Doing the impossible. Turning them profitable.

The story starts something like this. The son of a poor farmer from Phulwaria in Bihar’s district Gopalgunj is today being wooed and courted by schools of management and administration. On September 18, the Railway Minister is scheduled to lecture students at India’s top B school, IIM, Ahmedabad on the nuances of the railways ‘turnaround’. The turnaround story, in fact, has already been introduced as a case study as part of the institute’s curriculum. Very few case studies can really become part of the IIM A curriculum which is the best in the world according to all standards.

The Lal Bahadur Shastri Academy in Mussourie — training ground of India’s steely frame, the bureaucracy — is also reported to be wooing Lalu Prasad to come and deliver a lecture. He’s scheduled to speak at a Harvard University seminar in New Delhi next month. The HEC International Business School, Paris, wants to do a case study; GE boss Jeffrey Immelt has already done his salaams.

Laloo as usual believes that he will be able to make a mark even in this activity and he has full confidence on his abilities. What is making all the top B Schools and people like Jeffery Immelt doing salaaams to the man whom most of the country hates. To get the answer, one needs to go back to 2001 when an expert group headed by Rakesh Mohan ( former advisor to the finance minister at the time, Yashwant Sinha) declared: “Indian Railways is today on the verge of a financial crisis.” The report predicted that if the railways didn’t change track it was doomed to ‘fatal bankruptcy’. The same year, the railways defaulted on paying a dividend of Rs 1,823 crore; its fund balances were a mere Rs 359 crore and its operating ratio — that is, expenses divided by traffic earnings — stood at a whopping 98 per cent.

Fast forward to 2005-06: Fund balances had reached Rs 12,141 crore, operating ratio was down to 83.7 per cent and internal generation was a healthy Rs 13,612 crore — all this without hiking either passenger or freight rates.

The irony is obvious: A man who failed to make any discernible progress in Bihar in the seven years that he was chief minister (15 if you add Rabri Devi’s proxy tenure) has managed to achieve remarkable success in such a short while at Rail Bhawan.

Sudhir Kumar, his articulate officer on special duty, a Delhi School of Economics graduate who is often credited for the turnaround, has his own take: “It is the minister’s passion and integrity that is leading this change,” he says.