{audio:0:00:00} The worst case is never certain. When, a few years ago, we were studying with Laurence, amongst others, it would be on the threats on the aviation industry and Airbus. A typical framework for analyzing threats is that you look at geopolitical or geoeconomical scenarios and then you will see the impact on your industry. For instance, we were talking about war, in the Middle East, a large recession in China, due to health problems. We were talking about a big recession, in North America, due to a financial crisis. We studied those scenarios, one by one and said, okay, here the impact would be 5% on the overall industry; it would be important on the A380; it would not affect this type of aviation. We always concluded those studies by saying, yes, the assumption here is that we have this crisis alone, and we don’t have a combination of issues. We have never taken, as an assumption, that there would be something that would affect the world, as a whole.

{audio:0:01:48} So the worst is never certain, but sometimes it happens.

{audio:0:01:55} Yes. What happens here is that, for the first time since 1945, the world economy is at a stop. We are left with one question – how will the survivors restart? This question is a double question. First, when we say survivors, how do we survive? Second, how do we resume activity? How do we restart? How do we regenerate business, growth, activity and what will the world look like tomorrow, after Covid?

{audio:0:02:45} Maybe I can narrow that down for aviation, for my sector of activity, where I have spent a lot of time. It is clear that we will not travel in 2024 like we used to travel in 2014. The travel will be of a different kind. Obviously, we will need to revisit how we organize our airports, how we organize the seating in the planes. All these distancing measures will have an impact on the way we do travel. I read a comment by the CEO of IATA, the association of airlines, yesterday or the day before, saying, the era of cheap travel tickets is over.

{audio:0:04:00} What is behind that? You have to realize that, up to now, in the planes of all airlines around the planet, you had two types of customers. You had the, call it the leisure customer, and you had the high-yield customer. The high-yield customer is a customer who is paying the price to travel. The airlines were making their money on this high-yield customer. Why is this customer paying a price with margin, above the cost? Because he’s travelling, not for leisure, but for necessity. What has developed the volume in the airline industry is the customer who travels for leisure and not the customer who travels for necessity.

{audio:0:05:17} I’m not saying that tomorrow we will no longer have people who travel for leisure, but we will have less people travelling for leisure. The impact of that is going to be massive on the long-range travel. Firstly, because you have many more people travelling to visit exotic places on long-range. But it will also impact the domestic travel. It will not affect the shuttles between, say, London and Paris or Washington and New York, because this is mainly business, mainly necessity. But you will have much fewer people flying from, say, Paris to Nice or Washington to Denver.

{audio:0:06:23} That’s mainly because of the price or also, because of the behavior?

{audio:0:06:27} It’s a behavioral change. The people who travel will, even more than before, travel for necessity. They will pay the price, but you will have less people in the planes. This is how I foresee it. There is nothing more difficult to predict than the future, but it seems to make sense to me, at least in the medium term. We may recover, but the recovery will be long.

{audio:0:07:05} If we translate that into figures, I believe that, in the best case, for short-range, such as commuting, we should be back to the levels of 2019, somewhere in 2024/2025. Best case. The worst case, in my view, would be 20% less, by that timeframe and, beyond that, it’s too long for me to consider. It gives a view on how this industry should be shaped, or reshaped. If you take that as an assumption and take it down airline by airline, OEM by OEM, supplier by supplier, you can easily predict what is going to happen.

{audio:0:08:18} In a sense, this should not be seen as a surprise. What is the main characteristic of this industry? The main characteristic of this industry is that, except for sudden disruptions, like Covid, evolution is always slow. When you have no disruption, if it goes up, it goes up slowly, but steadily. Then poof, and then again, it goes up. My analysis is that mankind will continue to travel and mankind will continue to fly to travel, but from a behavioral standpoint, the impact on commuting is going to be the one I described. It’s more difficult to predict for long-range, going from one continent to another or crossing the oceans. I think, there, the reduction will be much bigger. In my view, in the worst-case scenario, it’s a 50% reduction.

{audio:0:09:33} Looking at the airframers and either the A320s or the 737s that you produce, per month, I think Airbus increased their targets in February and those targets are 63. What is your estimate that that could decrease to?

{audio:0:09:51} They never reached 63. They just said, our target is 63. I believe that they will be back to their levels of production of today, something in the range of 52/53, by 2024.

{audio:0:10:13} So we’re going to see a huge oversupply of aircraft?

{audio:0:10:17} Today, what they have decided is, they have revised the 63 target to say it’s 40, for the year. An average of 40, a month, between March and December. It doesn’t mean that they are producing 40 today. Possibly, they will produce 100 A320s in December, and you just average it down and you have this 40 level. I think they will be back to 55 in 2024.

{audio:0:10:59} Is there an oversupply of planes? The question is, when do you buy new planes? You buy new planes for two reasons. One, you establish new connections. In my view, this is not going to happen soon. The second case is when you have to replace old planes. This is where the 40 number comes from. This is where my 55 in 2023/2024 comes from.

{audio:0:11:42} Given your experience in dealing with the airlines, how would an airline be looking at taking orders and these two decisions? Let’s say they won’t be making new connections right now, but what about shifting from older planes to newer planes?

{audio:0:11:57} It was a necessity when you were looking to reduce your operating costs and when the oil price was positive. The oil price is positive. We are talking about WTI and you know it’s the future. It’s very easy to say, oil is worth nothing, because the future is negative, but it doesn’t mean that. This is going to continue, even though it’s not going to continue as acutely as before. People will say, I want to make savings on my running costs, but I’m not going to invest hundreds of millions unless I’m sure that I have a return. So it’s going to reduce.

{audio:0:12:53} There is another dimension that was never there before. Assume that there are rules of distancing in the planes. Airlines will have to revisit their cabins.

{audio:0:13:15} Do you think this is likely?

{audio:0:13:18} I cannot tell. If someone had told me, in January, that we would have a pandemic with the effect, I wouldn’t believe them. One needs to be prepared for anything. Even in a commuter, in a 737, when we are six abreast, we are seated next to each other. The three feet distance is not there.

{audio:0:13:50} This would ruin the economics of the airline, if you have to take a seat out.

{audio:0:13:55} This is going to be a big issue. It’s not yet on the table, but we should be prepared for it.

{audio:0:14:07} What, exactly, would you be doing, if you were running Airbus today?

{audio:0:14:19} What the current team is doing is amazing. I’m not surprised, because I have known Guillaume Faury for a long, long time now. I’m not surprised that he has reacted the way he has, together with his team. The consideration time was pretty short. They had three or four days of, we don’t know; we are assessing. Then they went back to work, I would say. They said, okay, here are our rates of production, we have responsibilities towards our supply chain, we have responsibilities towards our customers. The behavior would be the same.

{audio:0:15:16} Technically, is there anything I would do differently? Detailed stuff; nothing fundamental. What makes the difference is the way you approach the problems and the mindset you are in. I can compare to other companies, who said, if we do not get 60 billion, we’re dead. Airbus is in the same situation.

{audio:0:16:00} What about if you were running an airline today, what would you be doing?

{audio:0:16:05} It depends which airline. If I were running a Western airline, I would be applying a principle, an infallible principle of leadership. Never waste the opportunity of a crisis. I would restructure. It’s nothing personal. Western airlines, say Air France or Lufthansa, they are burdened by decades of history and never managed to really restructure. We’re not flying, so let’s restructure.

{audio:0:16:59} You can see some of that. Ben Smith is saying, we’re changing the organization, etc. I would be very vocal about that. I would say, no, no, no. We need to reduce our workforce; we need to revisit the terms and conditions of our pilots. We need to review the work organization of the ground staff. All those problems, all those matters that make it impossible, for a company like Air France or Lufthansa, to compete with the newcomers. The Middle East airlines, the Gulf airlines are always pointed at saying, they are cheating. No; the real threat is the Asian dragons, because they are extremely competitive, they have the highest quality on board and if nothing is done, they will control the business. They will take over the business.

{audio:0:18:13} The Chinese, the Malaysians, the Thais, the Japanese, who are completely restructuring. It’s about time to restructure.

{audio:0:18:27} Do you think there is a risk to the Eastern airlines taking market share, in the West?

{audio:0:18:35} At the end of the day, what matters is, who is still flying? Today, Air France or Lufthansa are protected by their governments, in terms of landing slots. But if there is no Air France flight, anymore, because we cannot afford it, then who knows. It is a big, big issue for me to consider. If I were running an airline, my priority would be restructuring.

{audio:0:19:12} What would you do with the orders you have, from the airframers? Defer them, cancel them? How would you be looking to negotiate with them?

{audio:0:19:21} Let’s not be naïve. Orders are very complex matters. Cancellations are never straightforward cancellations. It’s an ongoing negotiation. You have two airframers. I remember, in 2008, we spent six months of the year reallocating planes, from one airline to another, negotiating cash etc. If I were them, I would be looking for conditions with the airframers. I don’t say cancelling or deferring because, at the end of the day, it’s always conditions.

{audio:0:20:13} What about with Boeing and the MAX? If they miss delivery for 12 months, I suppose you can cancel without a fee or a penalty?

{audio:0:20:22} They have started having real cancellations. The MAX issue predated the Covid; it was nothing to do with Covid. The light was shed on it by Covid. Until just before Covid, when there was a change of CEO, they were saying, no, no, not a problem; we’ll be out soon. The magnitude of the issue started to be visible, somewhere in February and then you have Covid.

{audio:0:21:20} I’m not in their shoes, but if I were, I would bite the bullet. For the time being, they have not accepted the fact that they need to redesign parts of the system. They are still saying, we’re going to patch this and it’s a slight software modification. As long as they do not accept that, okay, we have a problem, we need this plane, there is no way we’re going to launch a 15 billion development that will be available in five years’ time. This is one of the effects of Covid; because we need this plane and we need it quickly, we are going to have a full redesign review of it and we will be spending the money it takes, to make it fly safer. As long as they remain in this, oh, it’s no big deal behavior, they are not out.

{audio:0:22:44} What do you think is so hard about making that decision?

{audio:0:22:53} Again, I’m missing insights, I would say. Here we move to these leadership facts. There is one rule that suffers no exception. When you have a team around you, you need to be conscious of the skills and you need to be conscious of the profile of each individual and you need to have people playing within their skillset. Let me explain that in more practical and prosaic terms.

{audio:0:23:54} Let the engineers do the engineering. Let the lawyers deal with the legal matters. Let the risk managers assess, measure and advise on the risks. Your job, as the leader, is to make decisions. When you make decisions, you make decisions within a frame, and there is no decision that optimizes everything. Deciding is choosing and choosing is giving up.

{audio:0:24:49} Back to the MAX, they don’t want to bite the bullet, because they don’t want to recognize liability. This is driven by their legal advisors. It’s funny to see that – and this is public – just before the change of chief executive, they made big changes and you saw it in a release. They changed the legal advisor on the 737. In fact, when you know the people, you know that this person was, in fact, running the show.

{audio:0:25:48} What characteristics do you think are most important, as a leader?

{audio:0:25:54} You need to be humble, because you need to be able to assess yourself. Who am I? What are my strengths? What are my weaknesses? As a leader, your job is going to be to assemble a team that compensates for your weaknesses. If I were to draw a graph, I would say, you need to assess along three different axes. Creativity, risk awareness and expertise.

{audio:0:27:02} Expertise is, how much do I know about what I’m supposed to do? Risk awareness is, am I paranoid enough? Creativity is, how much am I capable of thinking outside the box? First, you need to position yourself in this triangle. Am I of the risk-aware type? Am I of the creative type? Am I of the expert type? Am I more an expert that is creative? Am I more an expert that is risk aware? Where am I, in this triangle?

{audio:0:28:04} Once you have assessed yourself, you assemble a team that pushes the whole to the center of gravity. You have as much creativity as risk awareness as expertise. Where this becomes difficult is that this is dynamic in time. Your expertise grows. When you get hits, one after the other, you become much more risk aware. When you grow older, your creativity is less and less at the edge. You need to keep thinking of that and this is where humility plays. The temptation is so big to say, okay, I’ve succeeded in everything. So we’ll just do it as we did before. This applies all down the chain of leadership. It’s not just the chief executive. We’re always the leader of something.

{audio:0:29:35} How do you cultivate humility?

{audio:0:29:41} Besides what you can do in personal training, nothing is more humbling than comparing. Inside your organization, you put teams together and we compare cases between two different companies. Keep comparing. You may be the most successful leader in the world, but I can always show you things that can be improved. The first one to whom this applies, is myself.

{audio:0:30:43} What was your biggest challenge when you were leading MBDA?

{audio:0:30:48} It was creating one company, out of three or four companies, that were competing, with different nationalities, in an environment where, because it is defense, it is very nationalistic. I had the Matra people, French; the Aérospatiale people, French – fiercest competitors for 35 years. The BAE people, the Marconi people – fierce competitors since World War II. The Alenia people, Italy and the LFK people, Germany. Having all these guys, living together, working against the same targets. The way to achieve that, as a leader, is twofold. You need to throw your passport away, what you were or what you believed in or where you were coming from, is gone. It’s easy to state, but not easy to do.

{audio:0:32:19} We are all defined by our history. What I was asking myself, is to just draw a line on what defines me.

{audio:0:32:40} Firstly, I decided I would be based in London. I could have been based in Vélizy, near Paris. I decided I wanted to go to London. I spoke French, obviously. I spoke English; I learned German and Italian. Not as good as my French, but I was addressing the people in their own language. So there is a mistake when you say that the working language is English. It doesn’t matter. What matters is, to be understood and to understand the people.

{audio:0:33:31} Before joining Aérospatiale in 1998, that become Aérospatiale-Matra and EADS and Airbus, I was with the French MOD. What I decided is, I wanted to get acquainted with the MOD in Britain, the MOD in Italy and the MOD in Germany. I wanted to tell them that, as an individual, not just as the company, but Marwan Lahoud is going to serve you, as if I were a British, an Italian or a German citizen. I may not have succeeded, fully, but this was a condition to be considered by those people. One of the greatest moments in my tenure at MBDA is when HMG, in 2003, invited me to meetings about the Iraq intervention, the Iraq War, the second Gulf War, despite being French. When, after having addressed the issues with them, at the end of the meetings, the Chief of the Defense Staff said to me, we leave the management of the French team to you, in your organization, because we don’t want to offend them.

{audio:0:35:30} So I was considered as, almost a British national. This international challenge was, at the same time, the biggest challenge and one of the biggest achievements, I would say, in MBDA. It drove value. This is the very positive part. It drove lots of value.

{audio:0:36:12} Can we take a step back now, to 1998/1999, and the formation of EADS and your role in that and your vision?

{audio:0:36:24} I joined Aérospatiale in May 1998. The landscape, at that time, was the following. You had Aérospatiale, the company that was 100% state-owned, that was recovering with lots of difficulties from the aeronautics crisis in 1991 to 1995. Let’s not forget, it’s not the first time. In 1991/1992, the order book was negative. The order book in 1991 was negative, so there were more cancellations than orders. The same in 1992. Aérospatiale was recovering. It was state-owned, still a loss-making company and it owned parts of businesses. You had a JV in helicopters, with DASA, in Germany. You had a JV in space, you had a wholly-owned missile business, but competing with the French player, named Matra, for the last 35 years and it was a throat-cutting competition. They owned almost 40% of Airbus.

{audio:0:38:16} Strategically, it was a dead end. I was hired by the then chief executive of Aérospatiale, where every second week, you had an article in the press, saying he was going to be demoted by the government. He’s going to be replaced by this or that man. My hiring interview with him went the following way – I don’t know whether we will succeed, but if you are happy to help me, we need to take this company out of state ownership. We need to list it. We need to have private shareholding, because Airbus is going to be taken over, by the merger between BAE and DASA. At that time, BAE and DASA were talking and, had they managed to merge, Aérospatiale would have been sidelined on the Airbus story.

{audio:0:39:34} So I took the job. My role was to look at changes in the ownership, look at strategic combinations with players. One of the first things I had to work on was to convince the French government that it made sense to think about listing part of the shares, provided we were talking about industry. When I say that today, I say to myself, my god, this is so obvious. Why did it take so much? At that time, it was not obvious, at all. Keep in mind, in 1997, the socialists were back in government, in France, and the then French Minister of Defense had said, Aérospatiale private? Never.

{audio:0:40:38} We started working on that. I don’t want to bore you with the full story, but one rule I learnt from that time is, it’s the most unexpected moves that, sometimes, are the most effective. The last company with whom we would have been considering talking to and to talk merger, would be Matra. They were the competition. They were competing with Aérospatiale on missiles, on space. They were smaller, but they were the private company competing. When this started, it was very difficult to bring the teams together, but it took us three days to agree. Why did it take us three days to agree? Because it was unexpected on both sides, so no one had considered the pluses and the minuses. When we sat together, we just realized that it made a lot of sense. There were many more pluses than minuses.

{audio:0:42:06} This is the 1998 timeframe. The second lesson I drew from that time is, it’s not because you’ve succeeded in doing something that you should lose sight of the strategic objective. The strategic objective was and has always been, to consolidate the Airbus consortium, into one company. At that time, there were talks that had been going on for three years about, what I’d call consolidation, inside the JV, where the mother companies would give up their ownership, to create an independent company. This never works.

{audio:0:42:56} We had just closed the Aérospatiale-Matra deal on the 13th June 1999. We had our first meetings, with DASA, on the merger that created EADS. Don’t stop because you have succeeded. Don’t say, I’m going to consolidate my earnings or my win. It’s the same as the military strategy. If you stop at each step, you will never be on time. You need to keep the progression going and while cleaning and doing what you have to do, to make things ready to operate. But don’t stop. The EADS negotiation was really fun. Between Aérospatiale and Matra, we were both French, we knew each other, people had moved from one company to the other. The first negotiation in Germany were quite amusing. I enjoyed them a lot.

{audio:0:44:21} Why did you enjoy the negotiations so much?

{audio:0:44:23} The different behaviors, different culture. Today, it’s so simple, because I’m used to it. But at that time, it was quite funny to see the differences. There were people who became colleagues; we’ve all left Airbus now. When EADS was formed, in 2000, the consolidation on the top was done. But all the work had to be continued on the bottom, especially to create this Airbus company, because we still had BAE owning shares in the consortium and not part of the EADS conglomerate. In fact, I did not stop at the EADS creation. I had to continue to create MBDA, so the missile business of Matra, of Aérospatiale, of BAE, of Marconi, of DASA, LFK and of Alenia.

{audio:0:45:46} I had to supervise and control the creation of the Airbus company, as a company, as a subsidiary of EADS, 80% owned by EADS and 20% owned by BAE, with a put option for BAE. In fact, it was a deferred sale of the shares of BAE. All this occupied me between 2000 and 2002. Two years of full activity on these JVs, cleaning the GIEs, making sure that we had operations up and running.

{audio:0:46:31} What did you learn most, about negotiation, during that time? Bringing people together and negotiating these mergers and deals?

{audio:0:46:39} Two key things. Firstly, always put yourself in the shoes of your counterpart and think as if you were in his position. It makes it much easier. One may think that hiding your agenda, not unveiling your objectives, is good. No. One of the easiest ways to achieve things is, what do you really want. Here’s what I’m looking for. Is there a way to accommodate what you wish to do, what I wish to do and what you don’t want to happen and I don’t want to happen? By putting those lists together makes it much easier.

{audio:0:47:58} The second thing I learned, in negotiating, was that being unreasonable never pays. You have people that think that if you put your demands that high, you will achieve a better result than if you start that close to your objective and get to your objective. For instance, you consider that you are happy to pay a billion for something and you start by saying, okay, I will pay you €100 million for it. If you consider it to be worth a billion, you’d better say, okay, I’m happy to pay €900m.

{audio:0:48:52} Because of the credibility?

{audio:0:48:55} It’s like in chess. If you consider your opponent to be stupid, you lose. If you consider your opponent is much cleverer than you are, you win.

{audio:0:49:22} So be reasonable. Start at a reasonable level and then work from there?

{audio:0:49:28} You create Airbus. There’s this new European powerhouse in aerospace, to compete with the US. How did you visualize the strategy versus Boeing, as the business grew?

{audio:0:49:45} It took me a while, but I realized that the wrong approach was to say, compete with the US. Because Boeing is not the US. Boeing is Boeing. Boeing mainland is the US and Boeing is better placed than we are, to be supported by the federal government and by the various state governments. But still, Boeing is not the US. We can be not as American as Boeing. We, as Airbus, can be American enough to neutralize. This took a while. This developed during the competition around the tanker business. We had hired Ralph Crosby, from Northrop Grumman, to be our man in Washington and he educated me on that. I owe him a lot. He told me, don’t say Boeing is the US. You compete with Boeing; you don’t compete with the US.

{audio:0:51:03} This culture thing, as well? You don’t want to go against the culture?

{audio:0:51:07} This helped a lot. Today, okay, Boeing is still dominating the US market, be it defense or commercial. There’s not complaint here; I’m just saying that we have earned market share, both in defense and in commercial, because we have managed to demonstrate that we offer the best value and we have also managed to demonstrate that we were US citizens. We have an assembly line in Mobile, Alabama. We have suppliers all around the place. We have a helicopter business in Mississippi. This is how you move things. Aérospatiale is French. Airbus is no longer French. Airbus is as French as German as Spanish as British. Hopefully, it will be as American as the rest.

{audio:0:52:27} It’s almost like speaking the language of the customer?

{audio:0:52:30} Yes. Speaking the language in the full sense of it.

{audio:0:52:36} Exactly. Not just the actual language, itself, but be them, in a way; be with them.

{audio:0:52:44} My time at MBDA had really prepared me for that.

{audio:0:52:51} In your opinion, what do you think were the core reasons why the A320 started winning market share from the 737?

{audio:0:53:06} The 320 is almost 20 years younger. We tend to forget that. Airbus was a challenger and the challenger always eats market share from the incumbent. I think that the fly-by-wire decision in 1986/1987 on the 320 was a very good one. If I were to go back to my triangle, it demonstrated a lot of creativity and a lot of expertise. It was not dominated by the risk averse people and it paid back very quickly.

{audio:0:54:04} In the recent days, the NEO decision was a great decision. It deserves to be the subject of a full case study in management. What was the situation? In 2006, Boeing had started the Dreamliner, taking the whole industry by surprise, because they had been advertising, between 2003 and 2006, something called the Sonic Cruiser. Everyone was expecting them to go to the Sonic Cruiser. What they were expecting was to deceive Airbus, to push Airbus to start something like a successor to Concorde; so something supersonic.

{audio:0:55:08} Doomed. With the oil price, no way. So in 2006, when they started the Dreamliner, Airbus was completely caught by surprise. The reaction was to say, okay, we’re going to redo a 350. In fact, the first 350 was very bad. We had to revisit the 350 and go to the 350 XWB, extra wide body, and it meant billions and it meant investment and it was terrible. They decided, at Boeing – I’m guessing; I was not allowed to have any contact with them – we’re going to give the coup de grâce to Airbus. We’re going to drive them into thinking that we are launching a successor to the 737.

{audio:0:56:08} How do you do that when you are in their shoes? You start speaking to the supply chain, because this is the only link that exists between the two companies. You start speaking to the supply chain saying, if we want to design a plane that looks like this, what would it require? We started getting supplier intelligence, from all around the planet, saying, they are about to launch an NSR, a new short range. By the way, they have two models. One is called Little Boy and the other one is called Fat Man. One is a single-aisle airplane; one is a twin-aisle airplane. You, Airbus, need to do something.

{audio:0:57:03} The reaction at Airbus was very simple. Okay, let’s take our computer assisted design system and let’s start designing a plane. We had 150 people working on our own A30X, the new short range for Airbus. We had just made the decision to spend 20 billion on the 350 and we could not afford the 30X. We started having regular sessions, small groups of people. Today, if you speak to colleagues, each of them will tell you, I’m the one who invented the NEO. As a demonstration of humility, I will tell you that I am not the one who invented the NEO. We were talking and we were lost. We were almost desperate. We had to convince ourselves that there were other options.

{audio:0:58:18} What were the other options? Price war, saying, if Boeing starts something, we just bring the 320 prices down and we try to occupy the market. It’s not difficult to see that there is no future in this. Pushed by engine suppliers, pushed by one or two airlines, we started to have the idea about re-engining the 320. What do we want to achieve? We want to achieve less fuel burn. Okay, we can redesign some of the aerodynamics, but if we re-engine with much more fuel-efficient engines, it may do the trick. This is how the NEO was born.

{audio:0:59:37} Once we announced the NEO and we announced the first orders of the NEO, in fact, for the first time in the history of this industry, Boeing had lost the initiative. Again, chess playing. As long as you have the initiative, you’re leading. For the first time, Boeing lost the initiative. They had to react. They responded with the MAX; they stirred with the MAX. Had they not started talking about new short range, Airbus wouldn’t have launched the NEO.

{audio:1:00:20} What do you think are the core lessons from the 737 MAX?

{audio:1:00:29} There are three. The first is the strategic lesson I mentioned. Don’t agitate scenarios, if you have no certainty that you have addressed them all. Secondly, in aviation, whenever you try to do things quick and dirty, all you are certain of is to do them quickly and dirtily. This is the development of the MAX. No need for, we need to contain the cost; no need for simulation; no need for training; no need for three angle of attack sensors, one is enough. Either you do it professionally or you don’t. Quick and dirty doesn’t exist in aviation. The third lesson is the one I mentioned earlier. The crisis management is where you have to have the people at that position, not in different positions. Crisis management – put it back in flight, before talking contracts and legal proceedings. Put it back in flight.

{audio:1:02:00} It’s interesting how the NEO comes from focusing on your strength and re-engining a really successful platform, with what you know. Rather than, as you said, agitating or really encouraging a reaction from a competitor.

{audio:1:02:19} You’re absolutely right. It was not the way things were done, in this industry. It was not usual. Usually, we just take a blank sheet of paper and we draw a new plane. Here we said, we have a platform. Let’s see how we can improve it.

{audio:1:02:47} When looking at selling the aircraft, to airlines, walk me through how you would pitch the 320 versus the 737. Or just the negotiation and the selling process, of such a product, and what lessons you can drive for working professionals, from that.

{audio:1:03:09} We’re talking about a duopoly. The products are very well-known by the airlines. If I were in the shoes of an airline, I would keep asking Airbus and Boeing to make offers. What is the difference? What makes the difference is, you need to use your strengths. What are the strengths of the 320? The strengths of the 320 are the product range, the family. The successful planes are the larger ones, which is the 321, today. Not long ago, the 319 was a great success. It depends, very much, on where jet fuel prices are. Then it’s a matter of what concessions you are making to the airline. What is the cost of ownership? How are you supporting the sale? It’s a long, long process. At the end of the day, it’s a small market. How many airlines are there in the world? Let’s say there are 100 players. There are more but, basically, the market makers. Two airframers and, in the short range, two engine makers, in the long range, two engine makers. So it’s very personal and very much linked to interpersonal relationships. This is why you need to have the best sales people and you have to be very much involved yourself.

{audio:1:05:21} From Enders to the sales guy, we were involved, at some stage, in the sales process, depending on the airlines. We knew we had our sweet spots and areas to avoid.

{audio:1:05:43} What do you think defines a great salesman?

{audio:1:05:51} It’s negotiation, mainly. When you are talking to the customer, you are representing your firm. When you are talking inside your firm, you are representing the customer. In both cases, you put yourself in the shoes of the other guy.

{audio:1:06:19} But you also need to be humble, as well, to do that and put your ego to the side.

{audio:1:06:23} You have to be humble; you have to be very flexible and you have to be patient. Patience is of the essence. You need to know when to ask the crucial question. The crucial question is, are you going to take this plane or not? Once the guy tells you no, you’re lost.

{audio:1:06:57} How are you looking at how the 737 MAX issue can evolve? Do you expect them to launch an NMA now or at some point in the future? What are you looking at, in that sense?

{audio:1:07:08} I think they will have to. I don’t see any other way, any different way, from re-baselining the 737. Launching an NMA, when will it be available? Had they decided in March 2019 to do this redesign I mentioned, it would be through today.

Airbus: Launching A320neo versus Boeing 737

Former Chief Strategy and Marketing Officer at Airbus & Former CEO at MBDA

inpractise.com/articles/airbus-a320neo

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Marwan Lahoud

Former Chief Strategy and Marketing Officer at Airbus & Former CEO at MBDA

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Airbus: Launching A320neo versus Boeing 737(April 17, 2020)

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