straight talk
MARK BARNES: If you’re getting it wrong, stop
It can take courage to stop doing something that isn't working
It really takes guts to stop doing something that was your idea but isn’t working. Much harder to do that than to back a new investment decision filled as it usually is with enthusiasm, hopes and fabulous projections. Airbus decided to stop production of its mega-jumbo A380, the “double-decker liner” of the skies, within the next two years, just more than a decade after its initial launch. This is a short lifespan in the aircraft manufacturing business — the iconic 747 Jumbo has been around for 50 years! Airbus’s good earnings growth over the past decade and latest results provide an opportune backdrop to announce this “mistake”, take the knock, and deal with it. But it was no small investment, and the decision to withdraw was a brave one. Some fundamentals simply didn’t fall into place. The massive four-engine plane, carrying 550 passengers, must be full to make money. The EU hub-to-hub travelling patterns in a commercially united Europe, had to continue. Orders had to keep growing...
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