Interview – Bernard Lathiere

BL: At the time I was not the President of Airbus, I was in the French Civil Aviation Authority, but I was seconded to Airbus from the Government. I think the aircraft had to be successful before the end of the decade, if not it was a flop. On the other hand, nobody could believe, let’s say, eight years ago when I joined Airbus Industrie that we would eat Douglas in some way and Lockheed and that we would be, not the Number Two, but one of the two Number One.

JT: It is rapidly becoming obvious that Airbus Industrie and Boeing will, by 1990, have the jet airliner market virtually to themselves. What effect will this have on the airline industry?

BL: It will have, I think, a good effect. The first reason is that without our presence today, there would be a Boeing Monopoly, which is not good for the airlines, but which is also not too good for the overall aerospace industry. I believe in competition. If you take the A310 and the 767 for instance, both are much better now than they were twelve months ago because of the competition between us. So we concentrate all our efforts on making a better aircraft because we are pressed hard by the competition in front of us. So I think it is good. It is good too on a more global approach if you take Western Europe; if Western Europe cannot manufacture and sell products in manpower is important, because the competition from other continents in products such as textiles is too heavy for Europe. If at the same time, Western Europe cannot enter the field of high technology like aerospace because the United States of America is so predominant, then what is left to my country or Western Europe? Several tens of millions of unemployed people, and I’m not sure this is good politically for the total world. And in some way, since these aircraft programmes are a long-term venture we are trying to protect the jobs not only of this generation but the next one. I am not fighting for myself, I’m fighting to any son too and that, you can be sure, is why I shall never give up

JT: The entire airline market is dependent upon the international economy emerging from the current recession in order to greatly increase passenger figures and yield, and ultimately provide finance for the inevitable purchase of next-generation fleets. When does Airbus see this situation improving and what is the outlook for the airlines till 1990?

BL: The situation is already improving. We get two points which are very relevant to us and the airline industry. The first one is the situation on the airlines through over-competition on fares, over capacity, so many second-hand aircraft. On the market, we are competing with an aircraft that we sell between $50 m and $55 m against almost brand new second-hand DC-1Os which are $20 m, and we still sell. So that answers the first element. The second one is that to sell new aircraft the high level of interest rates in the world must reduce. This makes the amortisation of the capital expenses more difficult for the airline. An aircraft with a 150/o interest rate is more difficult to amortise than if you can select at 90/o for instance, which was the case some years ago. But I think it’s improving and I think this will definitely improve in the next decade. Finally, you can get two scenarios, one is the catastrophe scenario in which you believe that during the next three years, the crisis will go on. Then everybody can lock the door and go for holiday, including us. We don’t believe in crisis scenarios, this is why we think in the long term, in new aircraft programmes – because when you launch an aircraft its operation is a programme for 25 or 30 years – and when we call on the market in ’87 when the current crisis is over, and while I don’t say it will be a seller’s market, it will be a suitable and normal market.

JT: What do you see as the importance of State-backed financing to future aircraft orders?

BL: It must be said that all sales of aircraft are backed by State financing, including the US and Boeing sales. They have the EXIM bank which is supporting their sales at least when they are in competition with us; on the other hand there is no special financing for the Airbus or predatory financing as our competition sees from time to time, for a very simple reason. There is an agreement, official agreement between the EXIM bank and their European counterparts. This agreement sets up the framework of the financing we provide to the airlines. That is to say the duration of the loan and the minimum interest rate. This agreement is still valid and is controlled by the banks.

JT: One would take a safe bet on the A320 being the next member of the Airbus family. What then will follow first, the TA9 or the TA11 four-engined long-range aircraft?

BL: To us the 320 is not independent from the TA9 or the TA11. It’s the whole family that we want to develop. Our only question is not which one, whether we launch them or not, they will all be launched eventually to extend our range of products. The only question is when, and what is the priority between the three projects, and there we don’t give the answer. It’s the market that gives the answer and the answer last year was when we made an in-depth survey of the market. Later we met about one hundred and ten airlines. By far, most of them said we want a 150-seater to replace old 727s, DC-9s or 737s. So what’s coming after either TA11 or TA12? Because we have TA11, which is a four-engined aircraft, and T12 which is a twin. But a four thousand nautical mile range aircraft, or TA9, I don’t know. It depends mainly on the evolution of passenger traffic in the next decade. If the traffic is increasing very quickly the TA9, which is a stretched aircraft of the same capacity or slightly bigger than a 1011 or DC-1 _ 0 but has two engines instead of three, this one would come first if not for the TA11. It depends too whether you get city pairs traffic scheduling or commuters coming to big aircraft like the 747 which is crossing the Atlantic, so it’s up to the airline market to tell us the answer.

JT: How long before you see the Federal Aviation Administration in the US altering the twin-engine requirement for the overwater operation to allow an A300 or 767 aircraft to fly the Atlantic?

BL: Well, about nine months ago we had a joint press conference with Boeing in New York, which was made at the request of Singapore Airlines to announce the orders they have on the 747 and the A300 and A310, and one of your colleagues asked Mr T. Wilson, the Chairman of Boeing, whether there would be twins over the Atlantic. He said yes, within the near future there would be many twins over the Atlantic. Up to now the FAA and the Americans in ICAO were not favouring a twin because there was no wide-bodied twin coming from America. Now the situation has changed and the idea they have about safety is changing too.

JT: One notices that the quoted Boeing break-even figures are in the region of half that of Airbus figures. Is there any specific reason for this?

BL: The often-quoted figure of 700 aircraft is not just for the A300, it is quoted for the A300 and A310. That is, the two aircraft, and as you know we invested another billion dollars to develop the 310 which ensured that we are to expand the range. The point in your question is that today the productivity of Boeing is better than ours because they have a wider range of products and longer lines of production. In time this is precisely why we need to expand our family to have the same advantage. You cannot compete. The competition today is not met on the sales price. The selling price is made by the dominant company, which is still Boeing. The competition in the long run is at the level of the cost of production, and you cannot have the competitive cost of production if you are too small, compared to your main competitor. So this is why we are to expand because we don’t think we shall expand that much in the present market we have with wide bodies. As you know, we have taken fifty per cent of the worldwide body market in the last two years and we don’t think we can take eighty. So we have to take another thirty or forty per cent in markets such as the single-aisle 150-seater.

JT: Improvements in airframe weight reduction through the use of composite materials, aerodynamic drag reduction via improved computer design analysis and ever-improving engine design have cut airline seat/mile cost by a third or more since the first generation of widebodies entered service. What do you foresee as the next generation of advancements to further reduce airliner operating costs?

BL: I can take the example of the A320. Compared to the 727-200, this aircraft with the same passenger capacity will save more than 400/o on fuel alone. In that improvement, half of it is coming from a new generation of engines and the other half is coming from what we do. I mean aerodynamic systems, and there are two fields that we see for possible improvement. Anyway, I don’t think that compared to the present high technology there will be a new big jump in ten years. This is what I really think, and I believe that the first company to develop the hundred-and fifty seater will have an advantage because if another one is launched two years after it would not be a significantly better aircraft.

JT: What is the Airbus opinion of winglets on large jet transport aircraft?

BL: Up to now we don’t envisage it. We prefer to have a clean wing.

JT: To what extent will composites be employed in future Airbus designs?

BL: We foresee employing composite materials to a large extent on the A320 since we were very cautious in our advances in technology. We will really fly some composite material on the existing aircraft as tests. On the fin, the rudder for instance, some parts on certain Lufthansa aircraft are already flying, and we shall expand it in the A320 because it’s lighter and cheaper.

JT: General Electric and Pratt & Whitney have had the Airbus powerplant market sewn up. How long will it take for Rolls Royce to get aboard an Airbus product?

BL: I think the answer lies with Rolls Royce rather than Airbus. Because our policy is to be neutral in the choice of the engine. It happened that Rolls Royce was not interested in the A300 programme at the start. They put all their cards in the hands- of the Tristar. Apparently, that was not the right thing to do, and today it is very difficult to enter this new market because they come third and the airlines don’t go that way. This is why I think that if they wish to be in the A320 programme they have to start early, alone or with Pratt & Whitney. As you know, they are talking with Pratt & Whitney and the Japanese to set up a consortium that would compete with General Electric SNECMA combinations.

JT: On propulsion, do you see the large by-pass engines exceeding 70,000 lb thrust in the next fifteen years?

BL: I think that technically it is possible. The situation is to know whether it’s commercially viable and necessary.

JT: What is the Airbus feeling on alternative fuels, hydrogen for instance?

BL: Up to now we know only one company that has investigated hydrogen fuels, and that was Lockheed. Research showed that finally it might look more economical but at the same time you are penalised by extra weight for the tanks. It’s highly complicated and we don’t see in the medium term a future for that.

JT: Finally, what type of airliners will be flying in fifty years from now?

BL: I think the A320 will still be flying. I think you can go two ways. One is to reduce the cost of operation of these aircraft, and this is the route we follow. The other is a bigger aircraft, or a smaller aircraft with better engines, and better aerodynamics. And maybe, because you mention fifty years, supersonic aircraft – but I don’t see the development of the supersonic aircraft before some decades because it’s a question of engine technology. To develop a new engine, it costs between one billion and one point five billion dollars. I don’t know what would be the cost of the supersonic engine but it would be tremendous. I don’t see any manufacturer in the present day investing such a large amount of money for a supersonic engine, and if you don’t develop a new engine then you get, again, the problems of noise, the problems of fuel burn, of the supersonic airliners. Future for But supersonics.