EADS Goes With Simplified Management Structure

Defense Daily, July 18, 2007

The European Aeronautic Defence and Space Co. (EADS) on Monday agreed on a new management structure that does away with having French and German executives serve as co-CEOs in favor of a single chief executive in order to be more responsive to the competitive and market demands of the global aerospace industry.

Under the new organization, Frenchman Louis Gallois, who along with Thomas Enders has been a co-CEO of EADS, will now be the sole CEO of the multinational company. Enders, a German, becomes the CEO of Airbus, reporting to Gallois.

Airbus is EADS' largest segment and along with Boeing [BA] a global leader in the commercial aerospace industry. However, development troubles with Airbus' superjumbo passenger jet, the A380, have led to costly production delays, which in turn have led to several Airbus CEOs coming and going the past two years. On top of the A380 woes, Airbus has been slow to find an answer for Boeing's latest offering, the 787 Dreamliner, a long-range passenger jet which has been racking up orders from airlines around the world. To counter the 787 in the market Airbus has decided on the A350 XWB, which is in the design phase. Still the A350 family of aircraft is scheduled to begin deliveries five years after Boeing delivers its first 787 next year.

Enders will be supported at Airbus by Fabrice Bregier who will be chief operating officer.

Also, EADS said it will go with a single chairman, Rudiger Grube. Grube is a member of DaimlerChrysler's [DCX] board of management in charge of corporate development. As chairman of EADS Grube will be charged with overseeing the company's strategic development and managing relations with its shareholders.

In addition to the new management structure, EADS also plans to increase the number of independent members on its board of directors. To achieve this, DaimlerChrysler and the French holding company Sogeade, will each give up two seats on the board. In the future EADS' board would consist of four independent directors, the chairman, CEO, two representatives from DaimlerChrysler, two from Sogeade, and one from SEPI.

To bolster Gallois' management power, he and his Executive Committee will have sole responsibility for investments below $482 million and for the appointment of the management teams of EADS main subsidiaries and business units, except for Airbus and the EADS Executive Committee. Management at Airbus and the membership of the Executive Committee will be determined by the EADS chairman, CEO and board.

EADS said the appointment of managers will be based on the principle of the "best man for the job."

Approval of the management changes will be effected at the EADS shareholders' meeting in the fourth quarter of 2007. EADS main shareholders are Germany's DaimlerChrysler, France's Lagardere, and the French, German and Spanish Governments.

[Copyright 2006 Access Intelligence, LLC. All rights reserved.]

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