Airbus chief gambles on giving managers their wings

Thu Dec 13, 2012 6:14am EST
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By Tim Hepher and Cyril Altmeyer

PARIS (Reuters) - Frenchman Fabrice Bregier is waging a quiet revolution at the world's biggest planemaker, Airbus, gambling that he can achieve spectacular profit growth by letting his managers manage.

After years of top-down reforms to fix poor coordination that once reduced Airbus to disarray, Bregier has ushered in decentralization since becoming chief executive in June.

The industrial engineer has already played a leading role in turning around Airbus, the global rival to U.S. Boeing (BA.N: Quote), since joining six years ago as number two at the subsidiary of the European aerospace group EADS EAD.PA.

Now he believes that keyhole surgery will help to multiply Airbus profit margins five-fold and keep up with strong demand for its airliners from Asia.

"We have extra potential if we behave again as a small business unit. That is what we need to target," the recently promoted chief executive told Reuters in an interview.

Such change is risky in an industry where tiny errors can cost billions, as investors and airlines learned to their cost when coordination broke down on the A380 superjumbo or Boeing lost control of the supply chain for its 787 Dreamliner.

But after reaching 60,000 workers, Airbus has become too big to run from the center as Bregier aims to lift profit margins to 10 percent by 2015 from a meager 1.8 percent in 2011.

"We have decided to change the organization a little bit, which was very concentrated," he said in the interview conducted in London. "We will of course keep all of the harmonization of our ways of working, but will decentralize further to local teams that can manage their objectives."   Continued...

Airbus CEO Fabrice Bregier is seen during an interview with Reuters in London, December 3, 2012. REUTERS/Simon Newman