Growing crises in EADS management has put France and Germany to reconsider over its duel management system.
French and German leaders have called one-day summit at the Toulouse headquarters of Airbus to shape the future of Airbus parent EADS. Both stakeholder nations were in altercation over the failure of Airbus and blamed each other for their worst recent industrial crisis.
EADS was formed in 2000 with the merger of three European defense companies viz. Aerospatiale-Matra of France, Construcciones Aeronauticas SA (CASA) of Spain, and DaimlerChrysler Aerospace AG (DASA) of Germany. The company develops and markets civil and military aircraft, as well as missiles, space rockets, satellites, and related systems.
In the initial years, the company hit big profits; its flagship Airbus reign for five years, but lost its glory with the emergence of some technical problems in its highly ambitious Airbus A380 superjumbo, delaying its supply and consequently forcing customers to turn to rival Boeing.
Thereafter, it introduced a reconstructive plan, in which the planemaker is planning to cut its additional expenses by reducing its workforce. Amid the crises, policy makers also blamed company’s duel management and urges for single management, which strained the two nations’ political and economic relations.
France blames the crisis on a cumbersome structure at EADS, which has French and German co-chairmen and co-chief executives to preserve the interests of each country. France wants to scrap it, but side by side, it’s pressing to retain control of Airbus which makes up most of the EADS sales and is responsible for 55,000 jobs. On the other side, Germany appeared to be resisting French attempts to push through a speedy management shake-up. Germany has made clear that it wants to keep the top EADS job as the price for any deal.
French powerful foray doesn’t seem to succeed as it hold only 15 percent of shares. Majority shares lies in the hands of two core industrial shareholders — French conglomerate Lagardere, which owns 7.5 percent and German car firm DaimlerChrysler having 22.5 percent shares. Together, they nominate dual chairpersons and chief executives.
Although, France’s vow to change the duel management system will be good for the business, but the changes in management structure would mean reopening a shareholder pact, though it will be a risky enterprise because both sides are not ready to disturb the delicate power balance inside the company.
So, before taking any step, France as well as Germany has to ponder over the shareholders rights.
Via: Reuters
