Airbus CEO Streiff pulls up stakes after 3 months

The CEO of aircraft manufacturer Airbus, Christian Streiff, resigned the post on October 9, 2006, a little more than three months after he accepted the position.

The European Aeronautic Defence and Space Company (EADS), the parent group of Airbus, announced in a statement that the position of the CEO will be taken by its Co-Chief Executive Louis Gallois, retaining his original position as well.

Louis Gallois is a French businessman and has headed Snecma (1989-1992) Aérospatiale (1992-1996) and SNCF (1996-2006).

Gallois was appointed to EADS on July 2, 2006 following the resignation of Noël Forgeard, who resigned after allegations of insider trading, which he denied. Forgeard sold EADS stock weeks before its Airbus subsidiary announced the Airbus A380 would be delayed again. The announcement caused a 26% slump in the EADS share price.

In a statement, the group said: “The EADS board of directors has appointed EADS Co-CEO Louis Gallois as Airbus CEO with immediate effect. Louis Gallois will remain Co-CEO of EADS.”

“Non-Airbus divisions will report to EADS Co-CEO Tom Enders in the future,” the group added.

The statement also said EADS German co-CEO Tom Enders will no longer have direct managerial responsibility for Airbus as he earlier had.

Streiff, 52, the former Saint-Gobain executive, replaced Gustav Humbert and took over as Airbus CEO on July 2, 2006.

It is known that Streiff submitted his resignation letter because the EADS board first rejected his plans to refurbish Airbus, and then approved of it only in the broad terms, without assuring him the independence he wanted to draft and implement the details.

A source said doing so would have opposed EADS governance rules.

Due to the two year delay of flagship A380 superjumbo jet, Airbus is already facing problems, and the departure of its CEO has come as a fresh blow to them.

Although Streiff’s cost cutting turnaround plans were supported by the directors of EADS, but he had repeated clashes with them on the implementation of his plans and personal exercise over them.

It was reported that Streiff wanted to report quarterly to the parent company and have the concluding say on Airbus appointments, while senior EADS executives including Enders demanded closer supervision.

Airbus, the leading aircraft manufacturer based in Toulouse, France, was incorporated in 2001 under French law as a simplified joint stock company or S.A.S. (Societe par Actions Simplifiee).

Initially, it was jointly held by EADS (80%) and BAE Systems (20%), Europe's two largest defence contractors. BAE Systems announced its intention to sell its 20% share of Airbus in April 2006 and exercised its ‘put option’ in June 2006 to force EADS to buy the share, thus tightening up EADS supervision of the civil jet unit.

The company said its board “once more underlined its unanimous support for the Power8 programme as decided on Oct 3 2006 as well as for the immediate implementation of the A380 recovery plan.”

Analysts are concerned over the future of the Airbus A350XWB, the revamped version of A350, with larger fuselage cross-section able to accommodate up to 9 passengers per row.

EADS “will take its decision on the A350 XWB in the coming weeks,” the group said in its statement today.

It said the new management structure will bring “a leaner, more efficient corporate governance and additional cost savings within the EADS group.”

On August 30, 2006, shortly after the stock price decline caused by the A380 delivery delays, more than 5% of EADS stock has been reportedly purchased by the Russian state-owned Vneshtorgbank.

On October 3, 2006, soon after EADS admitted further delays in the Airbus 380 program would cost the company 4.8 billion euros in lost earnings in 2010, EADS shares, traded on the Paris arm of Euronext, and were suspended after they surpassed the 10 per cent loss limit. Trading resumed later in the day with the one day loss holding at 7 percent.

Due to the delay and hard hit shares, analysts fear both the A350 XWB and A400M military jet programmes may also face expensive problems.