France and Germany agree plan to tackle Airbus woes

The parent of planemaker Airbus, EADS (European Aeronautic Defense and Space Company), will rid itself of a complex dual-management structure, initially aimed at placating Franco-German interests, but blamed for years of political infighting and for putting an expected 5 billion euro hole in the company’s earnings.

Frenchman Louis Gallois, currently one of EADS’ two chief executives, will take over as sole head of the company, while his German counterpart will step down to become CEO of the aerospace group’s troubled subsidiary, Airbus, the company announced on 16 July. 

The shake-up deal is intended to end seven years of political infighting linked with the twin-headed structure, which is looked upon as the source of a series of management errors, technical problems and production delays that, earlier this year, forced Airbus to announce 10,000 job-cuts across Europe (EURACTIV 02/03/07). 

Enders – who becomes the fifth person in two years to run Airbus – will face the tough task of pushing through the heavy cost-cutting programme, aimed at liberating €5 billion in cash by 2010 in order to pay for the development of a new wide-body plane, the A350, in an attempt to stay in the race with US rival Boeing. 

Meeting in Toulouse, French President Nicolas Sarkozy and German Chancellor Angela Merkel hailed the decision. “This is a great day for this company, a great day for the Franco-German axis…Airbus and EADS need to be managed like companies and not like international organisations,” said Sarkozy, stressing that the changes did not represent a victory for either country: “France didn’t beat Germany and Germany didn’t beat France. It’s EADS which has won.” 

“It’s important that the company be run according to corporate, and not political, principles,” Merkel had stressed in an earlier interview with the German daily Handelsblatt. 

However, while some analysts and industry insiders said the deal would simplify decision-making and reassure investors, others remained sceptical that it would put an end to political interference in the way the group runs its corporate affairs. 

“Until the cumbersome shareholder structure is addressed, we continue to expect stalemate over many EADS issues,” Citigroup analysts said. 

The unions agreed. Jean Francois Knepper, head of Airbus’ European Works Council, said: “I don’t think this will solve anything…The actors have been shifted around, but the struggles for power and influence will continue.” 

EADS capital structure will continue to consist of a delicate balance of Franco-German interests, with core shareholders, including the French government – which owns a 15% stake in EADS – as well as French media and aeronautic conglomerate Lagardère (7.5%) and German car manufacturer DaimlerChrysler (22.5%), holding a veto over major decisions. 

Nevertheless, French and German officials also announced that working groups would be set up over the coming months in order to review the seven-year-old shareholder agreement. 

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