The head of Europe's Airbus (AIR.PA) has told staff that recent unexpected charges in its Space business are "not acceptable", in a candid assessment of a business facing what he described as an internal crisis, people familiar with the matter said.
In November, Airbus took a 300-million-euro ($320 million)charge on unidentified satellite programmes, said by industry sources to include the commercial telecoms OneSat family.
CEO Guillaume Faury told staff in a January review of 2023 that Defence and Space "performed strongly in many areas, but faced a major setback in the Space business which tarnished the overall performance", according to extracts seen by Reuters.
Some major satellite developments have recorded unexpected charges, Faury said, adding: "Put simply, mishaps of this magnitude and suddenness are just not acceptable at Airbus".
A spokesperson for Europe's largest aerospace group, which reports earnings on Thursday, declined comment on staff memos.
Faury said the episode demonstrated that risks had to be managed in the right way and urged the whole group to learn from what he described as an internal "crisis" in Space.
"We no longer 'say what we do, and do what we say'. As a listed company and a global leader in aerospace and defence, this is something we simply cannot afford."
A recent reorganisation of Defence and Space, splitting the unit into three parts - Air Power, Space Systems and Connected Intelligence - will strengthen accountability and help manage risks, and is already showing initial results, Faury said.
The company has separately told staff that Jean-Marc Nasr, executive vice president of Space Systems, will be replaced in March as head of Space Systems by Alain Faure, head of Airbus Operations, industry sources said, confirming French reports.
"Thank you for your unwavering commitment to the company, including in the recent difficulties. It is what it is," Faury said in hand-written comments addressed to Nasr in the memo, they said.
Nasr could not immediately be reached for comment. Airbus declined comment on management changes.
Since January, Faury has focused increasingly on reviewing Airbus's strategy in Defence and Space after the company appointed Christian Scherer as head of its core jetmaking business, a job previously held by Faury alongside his CEO role.
Some analysts say the decision to refocus Faury's role, as well as competition from Elon Musk's SpaceX launchers and a new generation of low-cost satellites, have raised questions over the European company's future in the space business.
Faury's January letter to staff, however, said that "a high-performing Defence and Space division is a stronger Airbus than one without a Defence and Space business".
Agency Partners analyst Sash Tusa wrote in a preview of 2023 Airbus results that outperformance in the core commercial jetmaking division would be eroded by weakness in Space, where he cited "seemingly structural problems of competitiveness".
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