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Airbus CEO Highlights Services, Changing Business Model

The aircraft manufacturer saw a healthy rise in services revenues in the first nine months of 2019.

Airbus’s services revenue reached €2.5 billion ($2.8 billion) in the first nine months of the year, 17% higher than in the year-ago period.

Rival manufacturer Boeing reported almost $4.7 billion of services revenue for the third quarter alone, although this included a hefty chunk of military work.

At Airbus, services’ share of total commercial revenues in the nine months to Sept. 30 was stable at 7%.

The European manufacturer appeared satisfied with the volume growth, some of which was due to the expansion of its Skywise data platform.

About 8,500 aircraft across more than 100 airlines are present on Skywise, which is up from about 70 airlines in June.

Nevertheless, not all of Airbus’s digital and data activities have proceeded so smoothly, with the OEM yesterday rescinding a controversial move to charge a royalty for its technical data following a backlash from MRO providers and airlines.

On a third-quarter earnings call, chief executive officer Guillaume Faury acknowledged the disquiet the proposal had caused, saying: “On the MRO, well, I'm not completely happy in the way we have introduced this fee on our IP [intellectual property] and we are working with the MRO shops and the airlines to update our policy and move forward in a more co-operative way.”

That said, Faury also noted that the fuss over the proposed fee was a relatively minor issue compared with wider structural changes that the manufacturer is implementing with digitization and signing up more customers to flight-hour-based service contracts.

“There's a big change of business model and we can see that there are some difficulties on the way, but I'm sure we will overcome those difficulties,” he said.

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