COURSE CORRECTION

Notably absent from Farnborough 2006 was the bonanza of Airbus and Boeing commercial aircraft orders that have been a trademark of other big shows in previous years. But Aviation Week's reporting team, led by London Bureau Chief Douglas Barrie, found this year's Farnborough to be a milestone event, nonetheless. For example, Airbus appears to have halted its downward spiral with the unveiling of the A350XWB, while Boeing continued to build momentum, including raising interest in the 747-8 freighter. On the military front, the British government used the venue to reveal its strategy for securing its guided weapons industry; U.S. defense contractors for once concentrated on international aspects of key programs; and Russian and Ukrainian moves on new products show there are still signs of life in the former-Soviet industry.

In a bid to boost competitiveness for the next decades, Airbus officials are evaluating far-reaching changes in the way they do business--changes that could break with long-established procurement and production strategies.

Under review are new approaches to global sourcing, information technology, and research and development. New Airbus CEO Christian Streiff and senior executives at Airbus parent EADS suggest a broad range of issues are on the agenda, including a close review of Boeing's performance on some efforts, such as the 787, to determine whether they should be emulated.

In his first public appearance, Streiff vowed to "launch the action plans which will make us more competitive, more reliable [and] quicker." He plans to use his first 100 days to assess the company's competitive situation and then chart a course forward, and he left no doubt that changes are in store.

The trailblazer for many of these efforts will be the newly revamped Airbus A350, which Airbus Executive Vice President for Programs Tom Williams says will likely reflect new sourcing approaches and the use of more modern information management tools.

"I WANT TO FULLY understand and improve Airbus's development process," Streiff adds. "I want to investigate the possibility of a faster ramp up [and] I also want a complete review of the supply chain management, and I need a full understanding of the situation with regard to potential risk-sharing partners." Streiff has put together a 14-point plan to address these issues during the summer, before formally moving forward.

Illustrating how far Airbus and EADS are willing to go, company officials were ready to adopt an A350 design that would have forced them to abandon the traditional method of transporting major Airbus assemblies from the various sites using the Beluga aircraft, Williams says. In the end, though, the aircraft's size increase did not necessitate that.

Airbus hopes the changes will help it make up ground lost recently in its perennial battle with Boeing--and boost its ability to compete in an adverse exchange rate situation of $1.30 to the euro. EADS co-CEO Louis Gallois notes that at such a rate, cost-cutting actions are required to remain competitive.

For Airbus suppliers, the stakes are large. For instance, Boeing has outsourced large work packages to major suppliers and also gone for a global sourcing approach. "The Boeing model is very interesting," says EADS co-CEO Tom Enders, who oversees Airbus. "We are studying that," watching to see what pitfalls Boeing may encounter, he indicates.