Note to Airbus: Next Time, Call Brown

UPS first learned of Airbus' shift in A380 production from the media.
Publish date:



decided last week to suspend work on the cargo version of the A380 to focus on the passenger version, it neglected to tell the only customer for the cargo plane.

That was unfortunate, at least as far as


(UPS) - Get Report

was concerned. The world's largest package delivery company, which operates the eighth largest airline in the world, found out about the shift in priorities from reporters' phone calls. "It certainly was not a very courteous handling of a large customer," says UPS spokesman Norm Black.

On Friday, the day after news of the suspension surfaced, UPS

canceled its order for 10 of the planes, which had originally been scheduled to arrive between 2009 and 2012. Even before work was suspended and workers were diverted, delivery of the first plane had been delayed until 2012.

It was the instability of the delivery date, not the communications failure, that caused the cancellation, Black notes. Still, as a general rule, it's good to keep customers in the loop regarding production schedules for their products.

Airbus agrees that "customers ought to hear something from us, not from the media," says spokesman Clay McConnell. But he notes that the diversion of resources would not impact the 2012 delivery date, which the two companies agreed to on Feb. 22. "Nothing about the Airbus internal workflow organization is inconsistent with our delivering the plane in 2012," McConnell said.

For UPS, the

Feb. 22 agreement provided a revised delivery schedule, something it had been seeking for months. To be sure, a 2012 delivery date was not ideal; the date had already slipped from 2009 to 2010. Securing a revised date set the stage for UPS to begin a review of whether it could live with an additional delay, Black says.

On Feb. 26, Airbus announced that its board had approved a restructuring plan, called Power8, that would reduce jobs and outsource more work. On Feb. 28, it announced details, including plans to cut 10,000 jobs. On March 1, the suspension of work on the cargo version of the A380 was first reported, apparently based on conversations between an Airbus spokesman and reporters in Europe.

Reporters also called Black, who contacted UPS airline executives. Although those executives had been told of the restructuring plan, they had not been told that the plan included suspension of work on the cargo plane, Black says.

At that point, UPS contacted Airbus for clarification.

"When we learned they were diverting resources from the freighter to the passenger side, that undercut our confidence that we would see the first freighter in 2012," Black says. "We had thought 2012 was reasonable with all the resources committed to it.

Redirecting resources is what led so quickly to the decision to announce our intent to cancel."