AIN Blog: Despite Political Meddling, EADS Gets the Best Man To Be Its Next Boss

 - January 27, 2012, 6:17 PM
After success as CEO of AIrbus, Tom Enders will be CEO its parent EADS from June
Tom Enders is to succeed Louis Gallois as CEO of EADS

Surprise, surprise: Airbus CEO Tom Enders is to be the new chief executive of the European airframer’s parent group EADS, succeeding Louis Gallois, who is due to step down—at the end of his mandate—after the company’s annual general meeting on May 31. Of course, there is really no surprise at all in the January 26 announcement of the EADS board. Enders has been widely identified for the top job in the European aerospace and defense industry for more than a year.

But that hasn’t stopped a changeover process that the EADS board says has been “prepared diligently” descending into unnecessary doubt and delay. And the reason for the fuss? Why, politics of course. EADS’s customers likely don’t care whether the group’s leaders come from Mars or Mauritius, but this is the house that politics built and so it’s ultimate main stakeholders—the governments of France, Germany and Spain—get to play poker to settle the national balance of power within the group.

This game has been dragging on for too long, largely due to unhelpful interventions of serial meddler French President Nicolas Sarkozy. With Gallois, a Frenchman, stepping down to be replaced by a German, Sarkozy felt compelled to ensure that the French powerbase on the board overall remains sturdy. According to EADS insiders, this sparked months of wrangling that has delayed the long-awaited announcement of Enders’ ascent.

Another factor is that Enders, evidently, is intent on making changes to the way EADS is run. This appears to have provoked concern among the French camp, where conservatism and national self-interest run deep. Some close to the transition process have indicated to AIN that while Gallois has always displayed the necessary diplomatic skills and sensibilities to keep everyone on board, Enders, age 53, might have less patience for walking on eggshells as he tries to refresh the EADS business model. As recently, as EADS’s annual press conference in Hamburg, Germany, on January 17 it was far from clear that the succession stand-off would be resolved any time before the final deadline of the annual general meeting at the end of May. Anyhow, the final outcome of all the horse-trading is that the man just about everyone regards as the best candidate will now lead EADS—after his sterling work in turning Airbus around from its many problems in recent years.

The national balance on the board has been maintained by naming Arnaud Lagardère, 50, as chairman to take over from the German Bobo Uebber (who will keep a place on the board). Decisions on other top management positions all too vividly reflect EADS’s fixation on national origin, as follows: Fabrice Brégier (France) will become CEO of Airbus; Harald Wilhelm (Germany) will become chief financial officer, alongside his present role as CFO of Airbus, following the request of Hans Peter Ring (Germany) to retire from the company; Marwan Lahoud (France), whose mandate comes up for renewal, is reappointed as chief strategy and marketing officer; Thierry Baril (France) will assume the role of head of human resources, retaining his duties as head of Airbus human resources and taking over from Jussi Itävuori (Finland), who will continue to represent EADS on the board of Finnish group Patria. Most other EADS board members are standing for reappointment.

In addition to the above, the following names will be proposed as non-executive board directors at the next AGM: Sir John Parker (UK), chairman of Anglo American PLC; Michel Pébereau (France), honorary president of BNP Paribas; Lakshmi Mittal (India), chairman and CEO of ArcelorMittal; Wilfried Porth (Germany), member of the management board of Daimler AG; Dominique D’Hinnin (France), co-managing partner of Lagardère SCA; and Jean-Claude Trichet (France), former president of the European Central Bank. Spanish state holding group SEPI still needs to name a director to represent the Spanish government on the board.

What remains unknown—and probably doesn’t matter—is the extent to which President Sarkozy got his way. Not much has been going his way lately. He is locked in interminable negotiations with Germany and other European Union states in a bid to save the euro currency from extinction—a process in which his personal contributions have not been universally regarded as constructive. Meanwhile, the Standard & Poor’s credit agency has just downgraded France’s credit rating from Triple AAA—a move that Sarkozy himself has acknowledged could cost him his bid for a second term as President in elections to be held in April and May. In the event that he finds himself out of work, maybe he could mount a late bid for a seat on the EADS board. Or maybe not. The good news is that this is supposedly the last time that EADS is obligated to appoint its senior leaders on the basis of selection by government shareholders. Who knows, they might go crazy next time and crown Airbus’s epically successful top salesman, John Leahy (American), as the next King of European Aerospace.