Political Turmoil over Airbus Mess
Corporate Crisis Turns into National Debates over Failures in Airbus
A few months ago the internal turmoil at Airbus spewed out into the field of politics and nationalism throughout major nations in the European Union.
Five of six quarterly losses for aircraft manufacturer Airbus have reignited the political fires in Germany and France. Adversaries for centuries, this new row has the potential to spread to other European Union nations including Britain and Spain.
In July 2007, EADS/Airbus put an end to its dual-chairman structure. It named Louis Gallois, of France, the CEO of EADS and Ruediger Grube, of Germany, the Chairman, while Thomas Enders, also German, became the CEO of Airbus. When problems arose within the company, Enders and Gallois insisted overnight that planned cuts to save €5bn by 2010 would be shared equally between France, Germany, Spain and Britain. "There are no winners or losers in this restructuring," Mr. Enders said.
The French government currently owns 15% of EADS, while Paris-based Lagardere SCA owns 7.5%. Their combined stake is balanced by German-based DaimlerChrysler, which holds 22.5 percent of voting rights in the defense group. Airbus Espana (CASA) also has a 4.7% stake in EADS. while BAE Systems sold its 20% share of Airbus to EADS at a fraction of its estimated value.
There was little doubt that the company had difficulties; however, causes had to be identified. Management placed the blame on the weak U.S. dollar. Employees placed the blame on mismanagement of the A-380 super jumbo program, shareholders blamed illegal insider trading activities and citizens point the finger at the employees' two-year delay of the A-380 and A-350 programs. The bottom line was Airbus had a €5 billion ($6.5 billion) deficit by June 2007.
EU
The EU’s main vocal source came from the left and small stakeholders. Allegations of insider trading and mismanagement were the cries. "Management errors lie behind Airbus' difficulties," said Martin Schulz, the leader of the Parliament's pan-European Socialist group. "It is all the more shocking to see today that it's the workers who pay the price and not the shareholders."
Appac, the French shareholder association, asked French & EU prosecutors to examine "top executives" at Daimler-Chrysler, Lagardère as well as France's EADS. "Small shareholders were left in the dark and lost their savings," said Didier Cornardeau, the Appac President. "I cannot accept the explanation that they did not know..."
Germany
Peer Steinbrück, the German finance minister, insisted the "European balance" of production and jobs in Airbus should not be "shifted to the detriment of Germany". He reportedly favors the government acquiring a stake in EADS to counter French state influence.
Michael Glos, economy minister, who is reported to be opposed to any government stake, reminded EADS that “…the German government contributed billions of euros to Airbus.” The proportion of jobs reduced must signify a balanced approach indicating both monies contributed and national positions held.
France
Thierry Breton, the French finance minister, said the EADS cost-cutting plans were "realistic" and "credible." Former CEO Christian Streiff told Le Figaro that it was a problem of autonomy. "It is not a problem of men," he said. It suffers from "a problem of structure…." But the French suffer from considerable internal dissent. Militant unions have shown little faith in the French leaders’ assessments current or past. “Louis Gallois is lying to us...Power8 is only the tip of the iceberg,” Xavier Petrachi of the CGT Union said. The first French Union alarm bells rang in spring of 2007.
With all the finger pointing and cries of foul it will be amazing if Airbus does not C&B.* CEO Gallois said: "We have to create an integrated company. It's not an easy job to do that but it's the way to success in the long term."
How can they accomplish integration with such diverse nationalistic cries? French President Nicolas Sarkozy summed up the problem very well. "How can a company succeed when it has dual management at every level and dual nationality at every level?"
*Aviation term meaning Crash & Burn. Implying bankruptcy in corporate cases.
Related Articles:
Airbus Labor Unions Take Hard Line
