EADS is no stranger to management upheaval, but its latest round of structural changes should usher in a new era. Reorganising the company into a traditional structure with just one chief executive and one chairman has long been seen as the only way to resolve the cross-border squabbles that have dogged it for years. Although the selection of Louis Gallois, instead of his former counterpart Tom Enders, as EADS's new chief executive has raised a few eyebrows, the end of the unwieldy dual-chief executive structure is a welcome, if inevitable, development. "The good news is the simplified structure. The bad news is that these guys are ideally suited to each other's jobs," says Richard Aboulafia, vice-president analysis at Teal Group.
But will the new set-up be enough to get EADS back on track? Delays on the A380 programme may be the highest-profile manifestation of its woes, but the roots go much deeper, back to the company's formation in 2000 and the constant need to maintain a delicate balance between French and German stakeholders and executives.
National balance
The company says the changes, announced last week with pomp and ceremony by French president Nicolas Sarkozy and German chancellor Angela Merkel in Toulouse, are intended to bring "efficiency, cohesiveness and simplification" to EADS's management and leadership structure, but it insists it will still maintain the company's delicate Franco-German balance.
As Enders cedes his position as co-chief executive of EADS to step into Gallois' shoes at Airbus, the company's major French shareholder, media company Lagardère, is loosening its grip. Former co-chairman Arnaud Lagardère is stepping down, but keeping a seat on the board, and leaving Rudiger Grube as sole chairman and head of the new EADS strategic committee.
But these developments, set to take full effect in the fourth quarter of 2007, are not set in stone. Observers believe Lagardère's seat on the board leaves a door open for him to resume his chairman's role if his company, which owns 7.5% of EADS, still has a shareholding in five years' time, when a management shake-up is again on the cards.
EADS's shareholder presence may have changed by then anyway because of the interest from international investors that began with Russian state bank Vneshtorgbank's purchase of a 5% stake. There is also continuing interest from the Middle East, and key French and German shareholders are expected to cut their stakes further.
EADS is also increasing the number of independent directors on its board to reflect its "global profile". DaimlerChrysler and French holding company Sogeade will give up two seats each to make way for the election of four independent directors at the next shareholders' meeting.
At least on the surface, months if not years of internal wrangling seem to have culminated in an amicable solution between Enders and Gallois. Some believe Enders has fallen on his sword, taking a demotion from co-chief executive of EADS to head of its subsidiary, Airbus. But others say he will now be well placed to take on the chief executive role when Gallois, now 63, retires.
Gallois has vowed to help Airbus's new chief executive win over the unions. His experience in dealing with French railway SNCF's unions was a key selling point when he took over as Airbus's fourth chief executive in two years. The fifth, Enders, is likely to need such help as he tries to steer through the radical Power8 restructuring plans the company is relying on to recoup its A380 and dollar-related losses.
Golden share
Meanwhile, the French and German governments will not want to relinquish control of valuable defence assets and companies that are firmly tied to their national industrial heritages. A revision of the current shareholders' pact is being considered to allow each government to hold a "golden share", enabling them to veto certain decisions.
There has also been much change within EADS's divisions, with EADS Socata, ATR and EADS Military Transport Aircraft all getting new bosses recently. But after the final, fundamental changes were given the green light in Toulouse last week, is EADS finally free to concentrate on the recovery of Airbus, the biggest star in its firmament?
For an interview with EADS's new chairman Rudiger Grube, visit flightglobal.com/grube
Source: Flight International
