Airbus retools its top leadership

German Chancellor Angela Merkel talks at a press conference at the Airbus factory.

TEXT OF STORY

KAI RYSSDAL: French President Nicolas Sarkozy and German Chancellor Angela Merkel met today in Toulouse, down in southern France. Not coincidentally that's where Airbus is headquartered. The two leaders were there to set their seal of approval on the latest shakeup at Airbus and at its parent company EADS. The European planemaker's been struggling to perform under a cumbersome management set-up, one that's handed a big competitive advantage to rival Boeing. From the Marketplace European Desk in London, Stephen Beard reports.


Stephen Beard: The deal agreed to today has been hailed "historic" for EADS, the defense giant which is Airbus's parent company. Although, on the face of it, it may not sound like much of a breakthrough:

Kevin DONE: Today the milestone that we have reached is that they have managed to reach agreement on there being one chairman and one chief executive.

But that, says Kevin Done of the Financial Times, is a huge improvement on the status quo. Currently EADS has two chairmen, one French and one German; and two chief executives, one from each country. A recipe for disaster — and so it has proved:

DONE: Duplication and difficult decision-making. And therefore always setting the scene that when there were difficulties in the company that really has caused almost a paralysis of management.

The dual Franco-German leadership was designed to ensure that both countries retained a say in a vital strategic asset — a defense and aerospace corporation which employs tens of thousands of people. But, says Kieran Daly of Air Transport Intelligence, it's been totally counterproductive.

Kieran DALY: The result of that is we've seen Airbus lagging very badly behind Boeing in the development of new aircraft, in sales of current aircraft, and for a long time, of course, in getting the A380 on track.

Airbus has been bogged down with the A380, the superjumbo. It's two years behind schedule and billions of dollars over budget. Boeing, meanwhile, has produced the highly successful 787 Dreamliner.

The new management structure agreed to today should reduce but not eliminate the Franco-German friction. After all, the new sole chairman of EADS will be German, while the sole chief executive will be French. But, says analyst Howard Wheeldon, it's a start.

Howard Wheeldon: I think Airbus is on the road back but there's a long way to go yet. Until we have got politics totally out of the equation we cannot be satisfied that it can match Boeing like for like.

French President Nicolas Sarkozy hailed today's agreement as a victory for EADS and Airbus, but Boeing seems likely to soar above its troubled rival for somewhile to come.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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