There could hardly be a harder job at a worse time: with Farnborough just a week away, Christian Streiff must fix Airbus and fast
If ever there was a man on a mission, it is Airbus’s new chief executive Christian Streiff. Two weeks ago, this urbane, multi-lingual Frenchman, born on the German border, had scarcely stepped inside an aircraft factory. In normal circumstances, any new CEO from outside the industry would have a period of grace to get to know the business and his fellow managers and assess their strengths and weaknesses.
But Streiff has no such luxury. In a week’s time, he and his likely new-look team will have to march into the media glare at Farnborough and convince sceptical investors and customers that there is a plan to get the troubled airframer back on course. According to someone who knew him in his previous life, as chief operating officer of French industrial conglomerate St Gobain, he will “stay up all night on the factory floor if necessary” to solve an industrial problem. Don’t be surprised if he looks as if he could do with a nap at Farnborough.
Streiff’s problems are almost too many to list. The A380 is a year late and customers are – to say the least – restless. Shareholders at parent company EADS are furious at the mismanagement that has led to the delay and the failure to communicate earlier with the company’s owners, and investors have sent shares plummeting. BAE Systems has put on hold plans to hand overall control of Airbus to EADS after Rothschild put a lower-than-expected value on the UK company’s 20% stake. Airbus still has no answer to Boeing’s fast-selling 787 and is under intense pressure to come up with a credible rival at Farnborough. Sales of the A340-500/600 are stagnant. Cross-border tensions and political in-fighting in Paris have ripped apart EADS’s facade as a harmonious European experiment that worked. Meanwhile, arch-rival Boeing – while no doubt enjoying the spectacle from the sidelines – remains committed to ensuring through the World Trade Organisation that Airbus does not receive state launch aid for future programmes.
So what does Streiff have in his favour? His biggest advantage is that he is an outsider. Firstly, he is untarnished by the bad management calls that led to the resignations earlier this month of Airbus’s chief executive Gustav Humber and chairman and EADS co-CEO Noel Forgeard.
Secondly, he will approach the airframer’s problems with an industrialist’s eye – rather than that of an engineer or a salesman. Thirdly, as a fluent German speaker, who has run a German company and is well known to EADS’s biggest shareholder DaimlerChrysler, he is much less a creature of the Parisian political-business elite than Forgeard. True, his immediate predecessor Humbert was a German technocrat, but, after many years of serving as Airbus number two, he was seen as Forgeard’s man.
Last week, EADS’s new chief executive team, Tom Enders and Louis Gallois, issued an astonishingly humble statement that acknowledged that “EADS’s reputation is at stake” and vowed to “regain the trust of our customers, investors and – not least – our employees in the management, the strategy and the products of EADS”.
The management changes – while falling short of the single CEO/single chairman solution we advocated last week – are a humiliating end to the era of Forgeard, the man who turned Airbus into the world’s predominant airliner manufacturer and the engine room of EADS’s success since its formation in 2000.
However, he became a victim of his own hype. Airbus’s order bonanza over the past few years and the high-profile debut of the A380 made it appear as if Airbus – and Forgeard – could do no wrong. But soaring sales and test aircraft soaring over air shows were hiding many sins. After moving to EADS last July, Forgeard continued to keep a firm control over Airbus and his fellow EADS board members and investors in the dark over Airbus’s emerging problems.
The reason EADS’s shares have fallen so sharply, despite a business that is extremely sound in other areas and growing in the right places (witness the largely overshadowed coup by its Eurocopter and US businesses in winning the US Army’s light utility helicopter contest last week), is that the markets believed the spin from Toulouse.
The reality check and humility coming out of Munich, Paris and Toulouse is welcome. But, for many, it will have come too late.