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France, Germany Try to Solve Airbus COO Conundrum |
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(Source: defense-aerospace.com; published Oct. 27, 2006)
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(EDITOR'S NOTE: EADS finally announced Brégier's appointment as Airbus COO, as well as other management changes, on Oct. 31)
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By Giovanni de Briganti
PARIS --- French and German officials are scrambling to find a face-saving compromise that would allow a Frenchman to be appointed chief operating officer of Airbus while satisfying German Chancellor Angela Merkel’s insistence that Germany not be excluded from managing the world’s leading manufacturer of civil aircraft.
EADS shareholders agreed in principle last week to appoint Eurocopter CEO Fabrice Brégier, a Frenchman, as deputy to another Frenchman, Louis Gallois, the EADS co-CEO who in early July also took over as chief executive of the Airbus unit. An announcement was expected on Oct. 20 or early this week, but has not so far been made.
The problem, according to government and industry officials, is that Brégier’s appointment had not been cleared with the German government which, although not an EADS shareholder, wields significant influence within the company. When Berlin was informed last week, German officials objected that Merkel during the summer had vetoed handing full management control of Airbus to France.
This explains why Brégier’s appointment has still not been announced. Ongoing French-German negotiations are focusing on identifying top positions that could be transferred to German hands, thereby mollifying Berlin to the point of accepting Brégier’s appointment. However, options are severely limited.
While the appointment of a German, Lutz Bertling, to replace Brégier as CEO of Eurocopter has reportedly been agreed, finding additional top positions that can be handed over to Germany is far more difficult.
Germans hold three seats on EADS’ 11-member Executive Committee, while France has five, one of which could be vacated by Brégier’s move to Airbus; the balance is held by a Finn (human resources), a Spaniard (Military Transport Aircraft) and an American (EADS North America), and cannot be changed.
The French government demands that Astrium (formerly EADS Space) be headed by a Frenchman as it is responsible for French nuclear missiles, while a US citizen must be CEO of EADS North America to meet Pentagon requirements. Keeping a Spaniard at the head of the Military Transport Aircraft Division is required by the Spanish government, which has an indirect 5.48 percent shareholding. Finally, missile unit MBDA must also remain under French control as it is involved in French nuclear missiles.
German managers already head EADS Military Air Systems and the Defense & Security Systems Division as well as the group’s finance and communications slots.
The only other top-level positions currently held by a Frenchman are that of Chief Technical Officer and of Chief Operating Officer for Marketing, International and Strategy. But the former is hardly synonymous with corporate power, while the latter is held by Jean-Paul Gut, a long-time associate of Arnaud Lagardère, who controls 15 percent (soon to be reduced to 7.5 percent) of EADS.
More significantly, Gut is the last remaining Lagardere senior manager at EADS, after the departures of Philippe Camus, Noel Forgeard and Jean-Louis Gergorin in the past 12 months. Lagardère opposes Gut’s replacement as it would end any direct influence by his company over EADS management.
Furthermore, in light of Germany’s distaste for arms exports, German executives are unlikely to find Gut’s main job, as EADS chief weapons salesman, an attractive career choice.
As of today, no acceptable compromise had been found.
-ends-
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