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FORGEARD GOES AT EADS – OUTSIDER TAKES THE HELM

02 Jul 06. The Wall Street Journal reported that EADS has pushed out its co-chief executive, Noël Forgeard, and the boss of its Airbus plane-making division, Gustav Humbert, in an effort to ease tensions at the European aerospace firm and help Airbus tackle industrial problems with two key jet programs.

Mr. Forgeard will be replaced, as expected, by EADS board member Louis Gallois, currently the head of France’s state railway SNCF, according to a statement released by EADS yesterday. Mr. Gallois, 62 years old, has extensive aerospace experience from previous positions he held in the industry.

Mr. Humbert’s replacement, Christian Streiff, however, is a newcomer to the industry and the first outsider to take the helm at Airbus. Mr. Streiff, former deputy chief executive of French industrial conglomerate Saint-Gobain Group, has 26 years experience running manufacturing and large industrial organizations.
His appointment underscores EADS’s determination to fix Airbus’s production problems. EADS officials hope he will sharpen Airbus’s ability to build planes on time and on budget. Airbus recently announced major delays on deliveries of its A380 superjumbo jetliner, the world’s largest passenger jet. The delays come as Airbus is facing customer dissatisfaction with another planned plane: the midsize A350 which is slated to compete with rival Boeing Co.’s 787 “Dreamliner” jet. Airbus is expected during the next couple of weeks to announce changes to the A350 or risk customers’ defecting to Boeing. “Christian Streiff’s prime task will be to stabilize the industrial process of the A380 and to restore confidence and momentum at Airbus,” an Airbus spokesman said.

In its statement yesterday, European Aeronautic Defence & Space Co., which owns 80% of Airbus, also said it will integrate Airbus more closely with the parent company’s organization. The move, prompted by the recent troubles at Airbus, should now be possible because EADS is in the process of buying the 20% of Airbus it doesn’t own from British defense giant BAE Systems PLC. A valuation for that stake was expected by late yesterday, both companies said. EADS’s German co-chairman Manfred Bischoff and co-CEO Thomas Enders will remain in their positions.

EADS and Airbus declined to make Mr. Forgeard and Mr. Humbert available for comment.

EADS has faced management upheaval since June 13, when Airbus announced a second six-month delay on its two-deck A380. EADS said the holdups would cut €2 billion ($2.56 billion) from its operating profit in the next four years. The company’s shares plunged as much as 34% in Paris and Frankfurt on the news, which set off a flurry of angry recriminations within the company and at Airbus.

Tensions increased when French market regulators announced a probe into the sale of EADS shares in early March by Mr. Forgeard, his children and several other top EADS executives. French authorities said they would investigate whether the sellers benefited from inside information.

Mr. Forgeard, who had previously run Airbus, called the timing of his sale an “unfortunate coincidence” and denied any wrongdoing. But the stock sales, and Airbus’s troubles, sparked a parliamentary grilling for Mr. Forgeard last week that further embarrassed EADS. Mr. Forgeard had long been a divisive figure at EADS because the company’s German shareholders believed he was trying to gain advantages for France within the carefully-balanced Franco-German conglomerate.

To maintain the balance between EADS’ two main shareholders, France’s Lagardère SCA and Germany’s DaimlerChrysler AG, EADS has two headquarters, two co-chairmen and two co-CEOs. Officials at DaimlerChrysler, which owns 22.5% of EADS, hadn’t wanted to see Mr. Forgeard promoted to EADS co-CEO last year from his post as Airbus CEO. But DaimlerChrysler had no say in the matter because under EADS rules, the German company appoints the German co-chairman and co-CEO, and Lagardère appoints the French counterpa

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