Airbus Chief Resigns

Oct. 10, 2006
Louis Gallois will succeed Streiff in the top job at Airbus while continuing as joint head of EADS.

Airbus chief executive Christian Streiff resigned after a little more than three months as head of the troubled European plane maker, and parent company EADS named one of its own co-CEOs to replace him.

European Aeronautic Defence and Space Co. said in a statement Monday that Louis Gallois will succeed Streiff in the top job at Airbus while continuing in his current role as joint head of the Franco-German defense group.

Streiff's departure deals a fresh blow to crisis-hit Airbus. The plane maker, which stunned investors in June by doubling the A380 superjumbo's production delay to one year, doubled it again this month to two years and said the holdups would wipe a total of euro4.8 billion (US$6.1 billion) off EADS profits over four years.

Streiff took over as Airbus CEO just over three months ago, replacing Gustav Humbert, who was ousted along with EADS co-CEO Noel Forgeard as a result of the A380 production crisis.

The 52-year-old former Saint-Gobain executive drew up a cost-cutting turnaround plan for Airbus that enjoyed strong support from EADS directors, but he clashed repeatedly with the board over how the plan should be implemented and how much control he would personally exercise, according to three officials familiar with the discussions.

Streiff wanted to report to the parent company every quarter and have final say on Airbus appointments, while senior EADS executives demanded closer oversight, according to the officials, who asked not to be named because the discussions were confidential.

In an interview for Tuesday's edition of the French daily Le Figaro, Streiff said he had not been allowed the "necessary operational powers" to do the job effectively and welcomed as "a step in the right direction" the combination of the Airbus and EADS roles for Gallois.

Since the creation of EADS in 2000, Airbus managers have answered to a separate chief executive at the parent company as well as their own. The A380 production delays, which came to management's attention only belatedly, have been blamed in part on the blurred reporting lines between EADS and its civil jet unit.

Those lines should be clearer as a result of the changes announced Monday. EADS' German co-CEO Tom Enders will no longer have direct managerial responsibility for Airbus, the statement said - leaving Gallois as sole boss. EADS owns 80 percent of Airbus and is tightening up supervision of the civil jet unit as it acquires the remaining 20 percent from Britain's BAE Systems PLC.

"If my successor doesn't have enough elbow room, and if the governance of Airbus doesn't evolve, then yes, the company's future is worrying," Streiff warned.

Streiff upset the delicate political balance underpinning EADS and unnerved German politicians and trade unions by suggesting that work on the A380 could be transferred to France from Germany and the A350 XWB - a planned rival to Boeing's 787 - could also be built in France.

The German government has suggested it may take a stake in EADS if carmaker DaimlerChrysler AG pares its own 22.5 percent holding. "We must prevent everything from going the way of the French," German Defense Minister Franz Josef Jung was quoted as saying Monday by weekly Der Spiegel.

After concentrating massive resources on the superjumbo, Airbus was taken by surprise by Boeing's two-engine 787, which delivers better fuel economy than older four-engined Airbus jets in the same size category - a sales argument that has grown more persuasive with higher fuel prices.

The gap is widening fast. Airbus took orders for 226 jets through Sept. 30, the Toulouse, France-based aircraft maker said Monday, compared with the 723 net orders announced by Boeing for the year to Oct. 3.

Earlier Monday, Gallois met with French Prime Minister Dominique de Villepin and Finance Minister Thierry Breton, and a spokesman for President Jacques Chirac said the head of state was following the situation closely. Restructuring at Airbus is on the agenda for Thursday's Franco-German summit, when Chirac and Chancellor Angela Merkel are to meet in Paris.

Shares in European Aeronautic Defence and Space Co. closed 1.3 percent lower at euro20.16 (US$25.41) in Paris ahead of the announcement.

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