State of the Airlines

Tuesday, October 10, 2006

Airbus CEO Resigns...Really...I'm Serious This Time

EADS has finally announced that Airbus Chief Exec Christian Streiff has well and truly resigned and that his resignation has been accepted by EADS and that his replacement will indeed be ex-Aerospatiale and current EADS co-chief exec Louis Gallois. In other words, everything that EADS and Airbus tried to refute over the last few days has turned out to be true. Everything...seems like a lot of wasted effort. Speaking of wasted efforts Streiff's departure after a mere 100 days should be viewed as an alarm that grows louder everyday. Consider Streiff's parting shots given to France's Le Figaro newspaper:
"I hope that (my resignation) will provide a salutary shock that forces a rethink about how Airbus is governed,"
"The organization and governance of EADS have as major objectives the preservation of a delicate balance between men, power and positions," Streiff told French daily Le Figaro on Tuesday. "This formula can work in normal times, but it is not appropriate for a firm that is going through a serious crisis."
the "governance of Airbus" would not allow his cost-cutting plan to succeed. "It is not a problem of men," he said, explaining that he personally had no issues with Gallois or EADS co-CEO Tom Enders. Instead, Airbus suffers from "a problem of structure," he said, asserting that EADS needs to give the manufacturer more autonomy to make decisions and carry out initiatives. He added that Airbus's production facility in Hamburg, where A380 assembly is centered, has "problems" and is the company's "weak link."
Normally I stay away from "industry" sources but they were all dead on regarding this situation so I will offer up this commentary:
An industry source who closely watches EADS said Streiff's position had become untenable after he exposed deep flaws in Airbus's industrial methods and raised the prospect of sensitive job cuts without adequate political cover.
And therein lies the rub. Streiff apparently made the mistake of offering his honest assessment when he called the Hamburg Airbus plant as "the weakest link" in the A380 production process. A smart business assessment, perhaps. A political bomb, absolutely.

My read on Streiff's departure is that the mix of business and politics at Airbus/EADS made the recovery of the A380 program impossible to achieve in the timeframe being demanded. Faced with an inability in enact the plans he felt necessary to bring about the needed changes Streiff seems to have seen the writing on the wall.

The funny thing is that time may bear out Streiff's assessment. New Airbus head Gallois has wasted no time in stating that their will be job cuts, its his first day on the job folks. He also states that cost-cutting will be evenly distributed between French and German operations. Take careful note, Gallois did not say that job cuts will be evenly distributed, he said cost cutting measures...the two are not necessarily equivalent. People...Streiff is the third CEO to depart Airbus since May 2005...maybe he's not the first to recognize the deep issues at Airbus.

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