Ejector seat

CEO Enders to leave in 2019 as Airbus overhauls board

Airbus Tom Enders
Survived longer than any other Airbus boss. Source: DPA

Airbus CEO Tom Enders has confirmed that he will not remain in office when his contract ends in 2019, highlighting what is likely to be a major revamp of the company’s executive team. The manager’s retreat ends an prolonged battle for survival in which Mr. Enders offered to step down if he were considered “no longer part of the solution.”

Airbus, partially owned by France, Germany and Spain, hopes a new generation of executives can steer the company through a spate of corruption scandals while fending off the ever-present threat of arch-rival Boeing. Guillaume Faury, the head of Airbus’ helicopter division, has been tapped to head the commercial aircraft division, and is now regarded as the most likely successor to Mr. Enders.

Mr. Faury replaces Fabrice Brégier, seen as the big loser in power battles rocking the company in recent weeks. Corruption probes in the UK, France, Austria and Germany weakened Mr. Enders’ position, encouraging Mr. Brégier’s supporters to push for his replacement. French media and politicians warned that by cooperating with the investigators, Mr. Enders risked handing commercial advantage to Boeing.

As well as massive fines, Airbus could face restrictions in the lucrative American aerospace market.

The Airbus board, due to meet on Thursday, seems to have successfully quashed the unrest, giving Mr. Enders a limited vote of confidence but leaving Mr. Brégier no option but to step down.

All eyes will now be on Mr. Faury. The 49-year-old manager, formerly of Peugeot, successfully restructured the helicopter division under tough market conditions. But running Airbus’s global civil aviation business will present a much greater challenge.

If Mr. Faury does become CEO in 2019, it would mark a new epoch for the company as power passes to executives with no ties to EADS, the predecessor to Airbus. EADS was formed during a far-reaching consolidation of the European aerospace industry in the 1990s and 2000s.

New faces at the top could help overcome the scandals, all of which relate to shady procurement practices in the last 10 years, with the company accused of bribes and other malpractice, including irregularities in the sale of military helicopters to Kazakhstan in 2010.

Since news of the scandals broke, Mr. Enders has insisted that the culture of the company and the aerospace industry as a whole has changed in recent years. He says Airbus is a model of transparency, integrity and good governance.

As well as massive fines, Airbus could face restrictions in the lucrative American aerospace market, where it sells civilian airliners, satellites, and military technology. In October, the company self-reported to American anti-corruption authorities, saying that it had submitted inaccurate information on the sale of defense equipment overseas.

In his 5-1/2 years as CEO, Mr. Enders has overseen the transformation of Airbus, restructuring the sprawling conglomerate of European aerospace firms into a tighter, leaner firm, less vulnerable to the political interference that dogged his predecessors.

Vorstandsvorsitzender von Eurocopter Guillaume Faury
Guillaume Faury will head Airbus' commercial aircraft division and might become its next CEO in 2019. Source: picture alliance

Despite criminal investigations and internal power struggles, Airbus has been on the rebound in recent weeks. In early November, the company announced it bought a controlling interest in the narrow-body C-series division from Canada’s Bombardier. Airbus plans to manufacture the twin-engine jet in the United States, thwarting efforts by Boeing to impose trade sanctions on its competitors.

Also last month, Airbus unveiled the largest order in its history at the Dubai airshow, with US leasing firm Indigo Partners set to buy 430 aircraft for €42 billion ($49 billion). Meanwhile Delta, the American carrier, announced it would buy 100 Airbus A321s.

But overall Boeing enjoyed a better year than Airbus, with robust demand for its 777 and Dreamliner models helping to double its stock price in 2017. Although the pan-European aircraft maker has full order books all the way to 2026, it has been plagued by manufacturing problems with its A320 and A321 neo aircraft.

More fundamentally, the four-engined double-decker A380, its prestige aircraft, is seen as outdated and oversized in comparison to nimbler Boeing aircraft. At the Dubai show, the Middle Eastern carrier Emirates announced it was canceling an Airbus deal and ordering 40 Boeing Dreamliners.

In its military aircraft division, Airbus has been plagued by reliability problems with its military transporter, causing expensive postponements in deliveries and embarrassing complaints from key customers including the French defense ministry, normally a staunch Airbus supporter. France, Germany, and Spain jointly own 26.4 percent of the Toulouse-headquartered firm.

There are also doubts about Airbus’s product pipeline and its ability to face the challenges of electrification and digitization. The recent departure of technology guru Paul Eremenko, not long after switching from Google, adds to problems in this area.

Although Mr. Enders secured his position for another 18 months, the period may prove to be the most difficult of his relatively long but ultimately troubled reign at Airbus.

Thomas Hanke is Handelsblatt’s correspondent in Paris. Brían Hanrahan and Jeremy Gray adapted this article into English for Handesblatt Global. To contact the author: hanke@handelsblatt.com

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