Sarkozy-Merkel summit aims to simplify EADS management, helping Airbus
PARIS: Ailing planemaker Airbus is about to get a visit from Mr. Fix-it Д new French President Nicolas Sarkozy Д who together with his German counterpart wants to simplify how decisions are made at parent company EADS.
Sarkozy Д who just two months into the job has unveiled ambitious plans to fix Europe, the French economy, its ailing university system and more besides Д now has Airbus in his sights. He has invited German Chancellor Angela Merkel to Airbus headquarters in Toulouse on Monday to seek a solution to EADS cumbersome dual management structure.
The unusual structure of European Aeronautic Defence Space Co., run jointly by French and German management, was cited in a report by the French Senate last month as a major reason for Airbus troubles.
In an interview with the German daily Handelsblatt, released on Sunday, Merkel insisted that politics must not play a role in the decision-making process at EADS.
“Its important that the company be run according to corporate, and not political, principles,” Handelsblatt quoted Merkel as saying.
EADS has been tarnished by a series of mishaps over the past two years at Airbus, with delays to the A380 superjumbo and a revamp of the A350 coming amid revelations of management errors, technical woes and huge severance payments for departing executives.
Top executives have been ousted and a massive restructuring plan will result in 10,000 job cuts over four years. The setbacks have cost the company billions of euros in profits and saddled Airbus with its first-ever operating loss last year.
Still, Merkel insisted “Airbus remains a success story.”
The German chancellor said, however, that important decisions on how the company would be run had to be made now, in order to ensure its success in the future.
Earlier this week, French and German officials said that EADS shareholders are nearing a deal to end the dual management system Д with a German likely to become sole CEO with a French person as sole chairman.
Both Sarkozy and Merkel have said maintaining a Franco-German balance at EADS is imperative.
The French government owns 15 percent of EADS, and French conglomerate Lagardere Groupe SCA holds 7.5 percent. The German government holds no direct stake, but Stuttgart, Germany-based DaimlerChrysler and German banks hold 22.5 percent.
Arnaud Lagardere, head of the group that bears his name, is said to be keen to remain chairman. If so, Frenchman Louis Gallois would likely have to give up his role as chief executive, leaving the role to German Thomas Enders. Gallois could stay on as head of Airbus, overseeing the restructuring plan.
Lagardere said shareholders hope to reach agreement before Monday, though there is no certainty of a deal.
Analysts said the main task for Sarkozy and Merkel will be showing they can rise above partisan interests.
“Frankly, if national issues cannot take a back seat in the current state of EADS and Airbus, then there is no hope for multinational companies with government involvement,” said Sandy Morris, an analyst at ABN Amro in London.
“The last time there was interference, it came from the French,” he said, referring to a power struggle between former French EADS executives Noel Forgeard and Philippe Camus. “The Germans are right to be wary.”
Competition between former Forgeard and Camus distracted them from difficulties with the A380, the Senate report said.
Forgeard replaced Camus as co-chief executive of EADS in 2005 Д then was ousted in 2006 with a \8.5 million (US$11.71 million) severance package.
EADS has other pressing issues to sort out. The delayed A380 is due to be shipped to its first customer, Singapore Airlines Ltd., in October, and the financing of the midsize, long-range A350 XWB, subject of a costly redesign, need to be finalized.
The implementation of the restructuring program also needs attention. Gallois has said the plans, which aim for annual cost savings of \2 billion (US$2.76 billion), need speeding up.
A raft of orders announced at the Paris air show last month has irked unions, who are questioning the need for job cuts and the sale of factories. Workers at three Airbus plants in Germany held protests Thursday against the possible sale of two of the facilities.
Currency issues will also be on the agenda, Sarkozys office said. His criticism of the European Central Banks monetary policy has irked Berlin, for which independence of the ECB was a criteria for joining the common currency.
“Consequently, there is no room for maneuvering on this point,” Handelsblatt cites Merkel as saying.
