EADS Says Change Must Start From Top
Newly appointed Airbus
CEO Louis Gallois, also EADS co-CEO, is set to restructure the
planemaker -- its management that is.
Gallois took the reins from recently resigned Christian Streiff,
who stepped down amid squabbling over management decisions.
As ANN reported, Streiff
wanted to restructure embattled Airbus following a third delay
announcement with the A380 program. Some analysts calculate the
cost of those delays to the company at over $6 billion -- not
including compensation to be paid to customers waiting for their
superjumbos.
Philip Lawrence, director of the Aerospace Research Center at
the University of the West of England in Bristol says with all the
financial hemorrhaging, Airbus must now sell at least 350 A380s
just to break even on the program. So far, it holds 159 orders with
no new takers in over a year.
Airbus announced the last A380 delay a week before Streiff
presented EADS his non-negotiable restructuring plan. When EADS
said no, Streiff said goodbye.
Political pressure seems to be the biggest challenge for
Gallois. Countries set to lose jobs as Airbus slims down are
pressuring the manufacturer from all sides. The biggest rift is, of
course, between France and Germany -- who also remain the biggest
shareholders in EADS, Airbus' parent company.
Aerospace analyst Richard Aboulafia at the Fairfax, VA Teal
Group told the New York Times, "The political balancing act has
hampered the company’s efficiency. There are a lot of
needless inefficiencies built into the management structure and the
production processes that are there to satisfy political
goals."
It's those managerial inefficiencies that Gallois is set to go
after first. And Gallois, former head of the French national
railroad, and no stranger to political maneuvering, seems just the
man to make it happen.
But even Gallois warns of eventual "painful" job cuts. European
aerospace analysts estimate the company may have to sell up to
seven of its sixteen assembly plants.
During a visit to a Hamburg Airbus plant last week, Gallois
reassured German workers they would not suffer alone saying, "We
have to ask for balanced efforts from both [Germany and
France]."
Rumors from all over Europe indicate national and even local
governments are poised to purchase shares in EADS in an effort to
protect jobs.
With politicians from France, Germany, Spain and now even Russia
involved, Mr. Gallois certainly has his job cut out for him.
Experts on both sides of the pond agree though, that eventually
Airbus must decide if it exists to make money for its shareholders,
or as a jobs program for the continent.