Airbus defends Russian titanium use, urges against sanctions

[LONDON] Airbus defended its decision to keep importing Russian titanium, contending sanctions would hurt aerospace manufacturers who depend on the lightweight metal and wouldn't deter Vladimir Putin after his invasion of Ukraine.

The European planemaker has been stockpiling titanium for many years, chief executive officer Guillaume Faury said at the company's annual general meeting Tuesday (Apr 12). That's given Airbus some breathing room in the short and medium term, even if an embargo does take effect.

"We don't think sanctions on imports will be appropriate," Faury said. "This will be a small impact on Russia and would have large consequences on the rest of the countries and the industry. So we think the no-sanction policy actually is the most meaningful one."

Airbus, a major customer of Russia's VSMPO-AVISMA, has so far been able to keep importing the material, which hasn't been directly targeted by a growing list of European Union sanctions aimed at punishing President Putin. US rival Boeing has halted Russian purchases.

Russia provides about half of Airbus's titanium needs, directly or through key suppliers. The company has been stockpiling the metal since Russia's 2014 annexation of Crimea, chief financial officer Dominik Asam said.

The Toulouse, France-based planemaker is working to bridge the gap in long-term supply by seeking out secondary sources, Faury said.

Titanium is prised in aerospace for its strength, low mass and corrosion resistance, making it ideal for components such as landing gear. It's also used to attach the carbon-fibre outer shell of the A350 widebody because it doesn't flex as much as other metals with temperature changes.

Defence role

The planemaker also spoke out in favour of its defence business, saying that the war in Ukraine has shown why European military capabilities are so important. "Defence matters not only for Airbus but for Europe as a whole," chairman Rene Obermann said.

Defence companies have been lobbying to reverse a trend of being excluded from so-called ESG screens used by major investors, based on the "social" component. Airbus and others argue that their role in protecting societies from aggression make them worthy of meeting such tests.

Other developments from the AGM:

• Shareholders backed all resolutions, including 93 per cent support for the company's executive pay policy in an advisory vote. Faury's 2021 paycheck totalled 3.6 million euros (S$5.3 million), plus long-term cash and stock incentives. He also received 100 per cent support for another three-year term on the board
• Airbus is sticking with a target of delivering 720 aircraft this year, providing there is no further global economic disruption - despite Russia's invasion of Ukraine, which will make the goal harder to achieve
• The company has set a target for reaching net zero Scope 1 and Scope 2 carbon emissions by 2030
• UK Labour Peer Paul Drayson unexpectedly quit the Airbus board after his recent resignation as CEO of the company he founded, Sensyne Health
• General counsel John Harrison said the company is on solid ground in a Dutch shareholder lawsuit over its disclosures in a bribery case that led to a US$4 billion settlement in early 2020. The company took external advice at the time and didn't disclose the matter earlier because due diligence was still being conducted, Harrison said BLOOMBERG