The A380 project, initiated in December 2000, aimed to create the world’s largest commercial aircraft and was an impressive engineering achievement. It was specifically designed to address changing market needs, including tackling congestion at hub airports. Additionally, environmental concerns were considered, resulting in the A380’s features of low emissions and low noise levels. The project spanned five years of development and testing and cost over US$600 million. The estimated total cost of development reached US$10 billion with an anticipated tax windfall of 3 billion euro in Europe alone and the creation of approximately 200,000 jobs globally. Ultimately, Airbus sought to establish itself as a dominant player across all market segments of commercial aircraft and surpass Boeing in the category of carriers accommodating over 500 passengers.
The unique manufacturing processes and new materials needed for the aircraft meant that there would not be many or any connections between the manufacturing of the A380 and the other Airbus aircraft families.
Other factors contributing to the project’s potential success were a high rate of growth in air traffic (twice the industrial average), the rise in revenue per passenger, congestion on the ground and in the air, as well as the accessibility of new technology for enhancing the cost-effectiveness of operating large aircraft.
The A380 aircraft received 50 firm orders upon its launch. The market expected to have a demand for 1235 aircraft, which would account for 8% of all commercial aircraft deliveries and have an estimated value of US$77.4 billion. A comprehensive market analysis was conducted successfully as the A380 catered to a specific clientele, with various tests being conducted on potential customers worldwide.
The A380, manufactured by Airbus, is the world’s largest civil aircraft and can accommodate 555 to 850 passengers. Airbus invested significantly in its development, making it one of their most significant and costly projects to date. The idea behind constructing a double-deck, high-capacity aircraft stemmed from the increasing number of long-distance flights and associated landing fees paid by airlines. This particular aircraft aimed to reduce operating expenses for airlines during extended journeys such as those between Europe and the USA.
The A380 was estimated to have an average price of US$ 290 million, making it the most expensive aircraft in the world. The pricing was meticulously calculated to cover all anticipated costs. Emirates Airlines placed the initial order for seven planes in late 2001. Subsequently, the company received additional orders and successfully attracted new customers. The first test flight occurred in 2006.
The project was unsuccessful.
The announcement by Airbus in June 2005 revealed the company’s failure to meet delivery and manufacturing commitments to customers on agreed-upon dates. Delays in delivering the A380 were caused by technical issues, primarily related to internal wiring in aircraft. Initially, the delays were expected to last six months; however, on June 13, 2006, Airbus announced another delay of six to seven months. These delays significantly disrupted the delivery schedule and resulted in the company’s inability to supply the promised quantity of aircraft on time in subsequent years. As a result of this project failure, both the CEO of EADS (European Aeronautic Defense and Space Company) and Airbus resigned due to their poor project management skills being highlighted. The project’s failure also had financial consequences as it led to a 26% drop in EADS share price and incurred an additional cost of $6.1 billion.
Existing customers voiced their dissatisfaction with Airbus and some decided to cancel their contracts and place new orders with rival company Boeing. In response, Airbus formed a research group to analyze the issues and find a solution. After conducting an internal review, the Airbus crisis research group determined that further manufacturing delays were inevitable. On October 3, 2006, the revised delivery schedule, reflecting these additional delays, was announced. Consequently, airlines experienced further delays, such as Singapore Airlines having to wait until October 2007 for the first A380 aircraft. Both FEDEX and UPS opted to switch from Airbus to Boeing, selecting the 747 and 777 aircraft models in November 2006 and March 2007 respectively, despite the dissimilar specifications compared to the A380. EADS is currently making efforts to retain its existing customers and orders, while also offering significant discounts to both new and existing customers in order to maintain its market share. Unfortunately, EADS is currently facing heavy losses and significant cash flow shortages.
The main issues in assessing the technological feasibility of the project were the difficulties in integrating the complex wiring system required for the aircraft with the metal airframe. The airframe contains 530km of wires, cables, and wiring harnesses, with over 100,000 wires and 40,300 connectors performing 1,150 different functions. This electrical system is the most intricate ever designed by Airbus. During the construction of the first prototype (registration F-WWOW) in Toulouse, France, engineers realized that there was a problem. The wires and harnesses had been manufactured as per specifications, but they were too short when installed. Even small differences of a few centimeters were an issue, as it is impossible to adjust cables in an aircraft by pulling them to make them fit.
During the construction of the prototype, Airbus management gradually realized that the issue of short wires was not limited to a single problem but instead was a widespread issue throughout the design. Internal reviews revealed that the crux of the problem stemmed from the fact that different design groups involved in the project had utilized different versions of Computer Aided Design (CAD) software to create their engineering drawings. This project involved collaboration between 16 sites across four countries. Specifically, German and Spanish designers utilized CATIA version 4 software, while British and French teams had upgraded to version 5. In theory, the sharing of drawings among these design centers ensured compatibility between the electrical system designed in Germany and the airframe components designed in France. Additionally, the design centers began integrating their diagrams into a singular 3D Digital Mock-up Unit (DMU) to further validate compatibility. Unfortunately, the construction of the prototype revealed that theory and practice were not always congruent. One factor contributing to this was that CATIA version 5 was not a simple evolution from version 4, but rather a complete rewrite.
According to reports, the issue arose from inconsistent calculations in bend radii for wires within the airframe due to different versions of the software. This led to a major challenge of removing the wiring from the prototype, redesigning it, creating new harnesses, and rethreading it into the airframe. The project faced multiple delays as hundreds of engineers attempted to address these problems. At one point, over 1,100 German engineers were stationed at the Toulouse production facility to rectify the issues. The root cause can be traced back to a single decision: proceeding with the project despite using two different CAD systems. This decision resulted in design inconsistencies, mismatched calculations, and failures in configuration management.
The complex organizational structure of Airbus is rooted in the history of the aerospace industry in Europe. Before the 1960’s, each European power had its own aerospace industry but as aircraft development projects grew larger and more complex, these separate entities struggled to compete. To address this, European governments collaborated to merge their aerospace expertise into a consortium that could rival the US-based Boeing Commercial Aircraft company. The first aircraft produced by Airbus, the A300, became operational in 1974 and was followed by numerous successful designs. By the late 1980’s, Airbus was able to directly compete with Boeing. In 2001, Airbus transitioned from a consortium to a single corporate entity, a challenging process of merging disparate organizations into a unified whole.
The differences in origins, corporate cultures, management styles, and IT systems across different parts of Airbus caused difficulties during the A380 project. These differences were ingrained and even at the highest level of the organization, there was a division between French and German control. In 2001, when the A380 Program Manager attempted to bring together German designers onto the same CAD system as their French counterparts, they encountered resistance due to personal rivalries and national pride. This problem remained unresolved due to pressure to maintain progress on the project. Five years later, this issue led to the Program Manager being fired. Despite overcoming these challenges, this decision point resulted in a billion dollar delay for the project. The lack of compatibility among design tools is not unique to Airbus and is a common problem in today’s complex integrated supply chains.
Below is a summary of the factors that led to the failure of the project:
There was a failure in configuration management due to the excessive focus on completing and launching the prototype.
Instead of focusing on the best approach to building the aircraft, a complicated organizational structure was employed in an effort to satisfy different divisions within the organization.
The opposition from project stakeholders, namely the CEOs of EADS and Airbus, is attributed to the failure in establishing a unified project team across the various design centers being used.
Due to an excessive emphasis on meeting strict deadlines, the project has experienced “schedule pressure,” which has led to the neglect of critical matters in its initial phases.
Not addressing issues promptly led to accumulating expenses and significantly increased costs when the problems were eventually tackled.
The Project Manager’s failure to anticipate the problems encountered prior to project launch is due to the complex organizational attributes and lack of provision for these issues.