Airbus CEO issues blunt warning as unexpected space business losses trigger internal overhaul

Guillaume Faury, the CEO of Airbus, has delivered a message to the company's staff, labelling recent unexpected losses in its Space business as "not acceptable."

This stark assessment comes in response to a 300-million-euro charge in November, related to unidentified satellite programs, including the OneSat family in commercial telecoms.

Faury, during a January review, acknowledged the setback in the Space business, stating, "mishaps of this magnitude and suddenness are just not acceptable at Airbus".

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In a bid to address the challenges faced by the Space business, Faury emphasised the need for effective risk management and urged the entire organisation to learn from what he characterised as an internal "crisis" in Space.

He highlighted the importance of aligning actions with commitments, stating, "We no longer 'say what we do, and do what we say.'

As a listed company and a global leader in aerospace and defence, this is something we simply cannot afford."

Airbus is set to report its earnings on Thursday.

Faury outlined a recent reorganization within the Defence and Space unit, dividing it into three parts - Air Power, Space Systems, and Connected Intelligence.

He expressed confidence that this restructuring would enhance accountability and risk management.

Faury mentioned that the new structure is already yielding initial results.

Additionally, industry sources revealed that Jean-Marc Nasr, the executive vice president of Space Systems, will be replaced in March by Alain Faure, the head of Airbus Operations.

Faury acknowledged Nasr's commitment in a hand-written memo, thanking him for his dedication during challenging times.

The management changes and strategic reviews reflect Airbus's commitment to addressing the issues within its Space business.

Faury's focus on re-evaluating the company's strategy in Defence and Space follows the appointment of Christian Scherer as the head of Airbus's core jet-making business.

Despite challenges and questions about the European company's future in the space industry, Faury emphasised in the January letter to staff that "a high-performing Defence and Space division is a stronger Airbus than one without a Defence and Space business”.

Analysts anticipate Airbus's 2023 results to be impacted by weaknesses in the Space business, potentially eroding the outperformance in the core commercial jet-making division.

Faury acknowledged competition from Elon Musk's SpaceX and challenges in the space sector, citing "seemingly structural problems of competitiveness."

(With inputs from Reuters)