Management Shake-Up at EADS and Airbus (excerpt)
(Source: German Government; issued July 16, 2007)
The European aerospace company is restructuring. The German Thomas Enders will become the sole chief executive of Airbus, while the Frenchman Louis Gallois will become sole chief executive of EADS. This was announced by Chancellor Angela Merkel and the French President Nicolas Sarkozy at the Blaesheim meeting in Toulouse. Both also spoke out in favour of retaining the independence of the European Central Bank.

"We are very satisfied," declared Merkel at lunchtime, speaking at the Airbus plant in Toulouse. "The company will now have an efficient and well-balanced management structure." During the negotiations a balance was achieved between the German and French sides.

Previously, the EADS shareholders had abolished the dual structures which had hitherto marked EADS to date. The aim is to streamline the company and speed up decision-making. As head of Airbus, Enders will be responsible for 80 percent of the operational business of EADS. He has hitherto co-headed EADS with Gallois.

EADS and Airbus are a key industrial-policy project of France and Germany. Airbus was set up in 1969 by the governments of Germany and of France.

The central feature of the joint project is the balance between Germany and France. The two sides hold equal shares - Germany indirectly through German companies while the French government also holds a direct share.

The philosophy of balance led to the two joint chief executives. The difficulties this has caused have attracted much criticism in the past.

Open to the principle of job rotation

The administrative council of EADS too will in future be headed by one chairperson, initially by the German, Rüdiger Grube. The administrative council has an important position since it has a say in operational business.

For all managerial positions at EADS and Airbus a rotation principle is being considered. The two sides have agreed that in future too the balance will be retained between the French and German sides.

During a visit to the headquarters of the EADS subsidiary Airbus, Merkel and Sarkozy were able to gain a first-hand impression of the efficiency of the company and its ability to hold its own in future too. At the Airbus plant in Blagnac they saw the modern production facilities for the new A380.

Power8 restructuring programme

Against an imposing backdropMerkel is delighted at the German-French cooperation in Toulouse. "Here we can see in action the close Franco-German friendship that we often speak about on a purely theoretical level".

The restructuring programme Power8, agreed in spring this year, is an important guarantor of the future success of the business, and aims to underpin the international competitiveness of Airbus.

Good news too from the International Paris Air Show. The full order books for the A350 are an indication that Airbus is on the right track.

SIDEBAR: Why Power 8?

Established in 1970, Airbus secured some 50 percent of the world aircraft construction market in the space of just a decade. Today it is in need of restructuring. The cause is a mix of outside factors like the weak dollar and problems of the company’s own making.

The company currently has orders to fill production capacity for the next five years. But it is already labouring under financial difficulties.

The latest problems with the Airbus A380 were only the trigger and not the underlying reason for the need to restructure, Airbus head Louis Gallois emphasised when unveiling the restructuring plan in Toulouse on 28 February. By his analysis, Airbus currently faces three problems: Excessively high costs, a lack of strong partners and too little real synergy within the company. These are compounded by needless national rivalries and parallel hierarchies, Gallois said.

The main aim of the Power 8 restructuring program is to cut costs, among other things by shedding some 10,000 jobs over the next four years: 3,700 in Germany, 3,200 in France, 1,600 in the UK and an additional 1,100 at the Toulouse headquarters. The job losses are to be split equally between temporary and permanent staff. The plan also provides for early retirement. Airbus management plans to achieve further savings by means of lean production and smart buying.

Airbus Industries will devote its resources in future to core activities and increase the amount of work it outsources from 25 to 50 percent. For each type of aircraft, there is to be only one final assembly line at one location.

The restructuring plan addresses three types of operating location. The first two types comprise core locations where Airbus itself invests and other key locations for which it is seeking industrial investment partners. The third category includes the German factories at Varel and Laupheim. These are either to be sold or integrated with other locations. (ends)

European Aerospace Giant Gets New-look Management Structure
(Source: Deutsche Welle German radio; issued July 16, 2007)
Looking to defuse a power struggle and ease tensions, France and Germany agreed on Monday to overhaul management at troubled European aerospace giant EADS and its Airbus subsidiary.

German Chancellor Angela Merkel and French President Nicolas Sarkozy presented the new leadership structure during their meeting in the southwestern French city of Toulouse.

The European Aeronautic Defence and Space Company (EADS) and Airbus had an awkward management structure with two co-chairmen and two co-chief executives from France and Germany.

The twin-headed management structure had been widely blamed for slow decision-making and inefficiency.

Under the deal, France's Louis Gallois will be the sole head of EADS, while Germany's Tom Enders will become chief executive of Airbus, which is struggling with losses amid lengthy production delays for its superjumbo A380.

Positive step

"I am convinced we have come up with a good solution for the future of EADS and of Airbus," said Merkel during a tour of the Airbus factory in Toulouse in southwest France.

"This is a great day for this company, a great decision has been taken. It is a great day for the Franco-German axis," said Sarkozy.

"EADS, Airbus, these are companies that have to be managed like companies and not like international organizations," he added.

Under the new structure, Rüdiger Grube of Daimler is also set to become sole chairman. DaimlerChrysler is the biggest private German shareholder of EADS.

Tension over?

This means the French co-chairman Arnaud Lagardere will be removed. But Sarkozy's comments that he could take over as chairman of the board under a rotating system every five years indicates that the sensitive question of the Franco-German balance could remain a problem.

EADS is controlled by a group of French and German shareholders which are either public or politically-linked private investors. Squabbles over control and influence have blighted its seven-year history.

Airbus posted a massive loss last year despite delivering a record number of planes, and the company is being left far behind its main rival US plane maker Boeing. The success of Boeing's recently unveiled Dreamliner has put the European venture under further pressure.

Radical restructuring plans that foresee the loss of 10,000 jobs have also been the source of considerable Franco-German tension with each side trying to keep job cuts in the respective country to a minimum.

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