EADS revamps management structure, ends co-CEO policy

With French President Nicolas Sarkozy declaring yesterday in Toulouse that the management structure of Airbus and its parent EADS "can't go on" in its current form, a sweeping Franco-German compromise was announced in which EADS abandoned its seven-year-old dual-nationality/co-CEO setup and a new Airbus CEO--the fourth in less than 13 months--was installed.

Tom Enders, the German who formerly served as co-CEO of EADS, was named CEO of Airbus, while Louis Gallois, the Frenchman who had been serving as co-CEO of EADS and president and CEO of Airbus since October 2006, was named sole CEO of EADS.

Germany's Rudiger Grube, a board member at EADS stakeholder DaimlerChrysler, will assume the position of sole chairman of EADS, ending a seven-year arrangement in which the chairmanship was spilt between France and Germany. Current French co-Chairman Arnaud Lagardere will remain on the EADS board and is in line to succeed Grube as sole chairman in 2011 under the compromise agreement reached yesterday. Airbus COO Fabrice Bregier, who was brought onboard by Gallois last October, will remain in his post and report directly to Enders.

Sarkozy and German Chancellor Angela Merkel met at Airbus's headquarters in Toulouse yesterday and emerged for a press conference detailing the management shakeup. The heads of state said the new structure would streamline both EADS and Airbus and help make Airbus a transnational company less influenced by local political concerns, a main goal of the aircraft manufacturer's Power8 restructuring initiative (ATWOnline, June 7).

"How can a company succeed when it has dual management at every level and dual nationality at every level?" Sarkozy asked. "Fundamentally, things can't go on like that. We need a single mode of governance. France didn't beat Germany and Germany didn't beat France. It's EADS which has won." Merkel added that "both sides are winners" in the new structure and that going forward, EADS' and Airbus's decision-making will be driven by business rather than politics.

In a statement, EADS said, "Guiding principles of the modification are efficiency, cohesiveness and simplification of EADS' management and leadership structure, towards governance best practices and in the respect of balance between the French and the German shareholders." The company said its shareholders also recommended "an increase in the number of independent members on the board of directors to appropriately reflect the global profile of EADS."

It added that Gallois would have "more leeway in the day-to-day management of the company" and that his management team would have "sole responsibility" for approving investments below €350 million ($482.3 million).