Flip through the latest issue of Gulf Weekly.
When French President Jacques Chirac and German Chancellor Angela Merkel sat down with their senior ministers at a summit in Paris to discuss European integration, they were faced with a glaring example of how the blind pursuit of economic nationalism can destroy a model of cross-border co-operation.
Longstanding Franco-German tensions provoked the latest crisis at EADS, the parent group of Airbus, exposing the transformation of the plane maker in just a few months from a triumph of European commercial and technological superiority into an enterprise fighting for its survival.
“Airbus is the most successful aircraft manufacturer in the world. Europeans can be proud, and look their tomentors in the eye. Their system works,” enthused Will Hutton as he hailed European co-operation in Airbus as a triumph in his 2002 book The World We’re In.
But last week Christian Streiff, the company’s short-lived chief executive ousted after barely 100 days in the post, admitted that the Airbus he found was years behind Boeing in bringing new planes to market and could need a decade or more to catch up with its American rival. Airbus has easily outsold Boeing for four years, but now the US company has overcome its own internal crises and threatens to regain supremacy for years to come, maybe even a quasi-monopoly in large commercial aircraft.
The conundrum facing the French and German leaders today and in the coming months is stark, according to insiders. It rests on whether they can put aside their destructive national interests and agree on a unified executive structure at EADS — including a single chief and chairman — that will enjoy their confidence and trust and serve both countries’ needs.
This will prove challenging, especially as other countries now want to be involved. Vladimir Putin, the Russian president, said in Dresden that he wanted to increase the five per cent stake held by a Russian state bank and, more critically, the Russian influence within the EADS leadership. An earlier demand was rebuffed by the EADS board because of the shareholders’ pact which enshrines joint control between the French and Germans.
Spain’s economy minister, Pedro Solbes, also says his government wants to increase the 5.5 per cent stake held by a state holding company and secure a greater influence than its one, non-voting seat on the board to safeguard thousands of Spanish jobs. Manfred Bischoff, EADS German co-chairman, will merely countenance a rise in non-state interests.
But this new tussle for national power pales against the continuing battle between France and Germany, who between them control 45 per cent of EADS. Several German ministers have indicated that they want KfW, a German state-owned institution, to acquire a holding in EADS explicitly to counter French influence.
For insiders, Louis Gallois, the new Airbus chief executive who will also continue as EADS co-chief executive, could be the catalyst for restoring that grace. “There’s a completely different feeling since his appointment. He may be French, but the Germans have sufficient trust in him to represent their interests as well,” a source said.
Tom Enders, his German co-chief, and Bischoff, who shares the role of chairman of EADS with French media group head Arnaud Lagardere, have indicated they want EADS to be wholly owned by free-floating shareholders, with a single chief executive and chairman chosen regardless of nationality. But that may not happen for at least three years, insiders say, and requires a “co-ordinated dance” between the French and Germans.
Meanwhile, Gallois has to implement the 2 billion euros annual cost-savings plan bequeathed by Streiff who, in interviews last week, identified the formal dual-nationality split in both production and management as a root cause of the Airbus crisis.
Gallois says drastic measures are required to offset the 41 per cent decline in the dollar over the past six years. It is an open secret that EADS is considering moving production to countries such as China, India and Russia — and the US. He says the issue of Airbus’s 16 European plants will be decided in the new year and the burden of any closures and job cuts will be shared.
His task — restoring Airbus’s reputation and integrating it into a unified EADS structure of corporate governance — is colossal.
Many think turning EADS/Airbus into a “normal” group by overcoming six years of political clashes may prove a task too far.
— The Guardian
David Gow
