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EADS taps Gallois as new president

EADS, the parent of troubled planemaker Airbus, is abandoning its twin-chief executive structure, with France's Louis Gallois taking the company's reins. The leaders of France and Germany said the deal marked a big day for the companies.
An Airbus A380 takes off from the Chatrapati Shivaji International Airport, in Mumbai, India, earlier this year. Ailing planemaker Airbus is about to get a visit from Mr. Fix-it — new French President Nicolas Sarkozy — who together with his German counterpart wants to simplify how decisions are made at parent company EADS.Rajesh Nirgude / AP
/ Source: The Associated Press

The parent company of troubled planemaker Airbus will abandon its twin-chief executive structure held jointly by Germany and France, with France’s Louis Gallois taking control, the company said Monday.

The European Aeronautic Defence & Space Co. said German Ruediger Grube is to become the sole chairman, and German Thomas Enders takes over Gallois’ former role as chief executive of Airbus, while stepping down as co-CEO of EADS.

He will report to Gallois, now responsible for leading the management team. Grube will oversee Gallois’ decisions and lead a newly created strategic committee, EADS said.

French President Nicolas Sarkozy said the deal marked “a big day for this company,” a sentiment that German Chancellor Angela Merkel echoed during a meeting at Airbus headquarters in Toulouse.

EADS and Airbus “should be managed like companies and not like international organizations,” Sarkozy said. Merkel told reporters, “The Germans are very happy.”

Enders called the new arrangement a “balanced solution,” and that working with Gallois had given the two a “crisis-tested” base.

Gallois did not confirm details of the deal but told reporters he was satisfied.

“I’m very happy with my future job, which is very close to what I do now,” Gallois said.

The unusual structure of EADS was cited in a report by the French Senate last month as a major reason for Airbus’ troubles.

Sarkozy said that every five years, the EADS chairmanship will alternate between a Frenchman and a German. Arnaud Lagardere, who relinquishes his job as EADS co-chair under the new deal, will be offered Grube’s job in five years if wants it, Sarkozy said.

EADS said the changes “will reinforce the efficiency of the group,” with more day-to-day leeway to Gallois and his executive team, and board decisions taken by a simple majority vote.

Shareholders will be asked to approve the new structure at a general meeting to be held later this year.

The French government owns 15 percent of EADS, and French conglomerate Lagardere Groupe SCA holds 7.5 percent. The German government holds no direct stake, but Stuttgart, Germany-based DaimlerChrysler and German banks hold 22.5 percent.

EADS has been tarnished by a series of mishaps over the past two years at Airbus, with delays to the A380 superjumbo and a revamp of the A350 coming amid revelations of management errors, technical woes and huge severance payments for departing executives.

Top executives have been ousted and a massive restructuring plan will result in 10,000 job cuts over four years. The setbacks have cost the company billions in profits and saddled Airbus with its first-ever operating loss last year.

Still, Merkel insisted “Airbus remains a success story.”

The German chancellor said, however, that important decisions on how the company would be run had to be made now, in order to ensure its success in the future. Both Sarkozy and Merkel have said maintaining a Franco-German balance at EADS is imperative.

Besides the management structure, EADS has other pressing issues before it, including the delayed A380 and the financing of the midsize, long-range A350 XWB, subject of a costly redesign. Workers are now questioning the need for job cuts after a raft of orders were announced at the Paris air show last month.

Jean-Francois Knepper, of the Workers Force union, criticized the new management structure as a mere shuffling of chairs.

“The actors have been shifted around but the struggles for power and influence will continue,” he said.