The Tom Enders revolution continues at Airbus Group, soon to be simply Airbus under a plan to merge the corporate entity with its commercial aircraft division and near-namesake. The proposal, the latest bold stroke by its German chief executive – approved by the board on 29 September and which will take effect in January – will see all three Airbus Group divisions – Airbus, Airbus Defence & Space, and Airbus Helicopters – become simply commercial aircraft, defence and space, and rotorcraft businesses, all known as Airbus.
You might be forgiven some confusion. That is partly because Airbus Group last went through a major rebranding exercise just three years ago when the cumbersome 13-year-old EADS (European Aeronautics Defence and Space) moniker was scrapped in favour of Airbus Group. Also out the door went the established Eurocopter name in rotorcraft, together with Astrium in space launchers and satellites, and Cassidian in defence and security, itself a brand introduced just a few years earlier. Logo designers had rarely been so busy.
But the changes go deeper than just labels. Along with the name change, there is a key management move. Fabrice Bregier, the head of the commercial aircraft business, will additionally take on the head office role of chief operating officer; having previously run Eurocopter and missiles unit MBDA, Bregier has plenty experience across the group’s activities. His main group responsibility will be for “reshaping digital operations” and the global supply chain. His counterparts at defence and space and helicopters, Dirk Hoke and Guillaume Faury, remain in their jobs.
Since taking charge at the then-EADS in 2012, Enders has made a series of changes that would have been unthinkable to the cautious fathers of the Franco-German-Spanish conglomerate when they engineered the biggest merger in European aerospace at the turn of the century. For its first few years, EADS was run by joint chairmen and joint chief executives, sourced from the French and German main shareholders. The senior management structure was a delicate balance of national appointees, and politicians and executives in each country jealously guarded their “national assets”.
There were clear reasons for such a complex structure. Since the war, Germany, France and Spain had nurtured their aerospace industries, bolstered by strong defence spending, the development of space satellites, and the advent of the helicopter and commercial jet age. Although the end of the Cold War and the hegemony of Boeing following the merger with McDonnell Douglas in the 1990s had forced Paris, Berlin and Madrid to consolidate – Airbus itself had launched as a commercial aircraft consortium some two decades earlier – national divisions were still prevalent.
Two developments in the mid-2000s meant the fragile edifice could not continue. Firstly, the UK’s BAE Systems – which had remained a 20% shareholder in Airbus despite shunning an offer to join the European mega-merger at the end of the 1990s – disclosed its intention to move out of civil aerospace, and sold its stake to EADS in 2006. Around the same time, serious problems were emerging within the in-development A380 programme, much of them the result of incompatibility between the Hamburg- and Toulouse-based arms of Airbus.
The result was a move to a single EADS chief executive in 2008, with Louis Gallois taking charge. However, Gallois – a veteran French industrialist and civil servant – was largely preoccupied with a strategic plan to rebalance EADS away from its dependence on its commercial aviation arm. When Enders succeeded him, he did not hold back, shutting EADS head offices in Paris and Munich and moving HQ to Toulouse. He also introduced an independent board of directors, integrated divisional and group functions such as human resources, and increased the free float of shares to 70%. His one failure was an attempt to merge with BAE to create an all-powerful European defence player alongside Airbus in commercial, thwarted chiefly by the German government.
A series of recent calamities – from delays on deliveries of cabin products for the A350 to continued engine problems on the A400M – appear to have convinced Enders that a tighter grip on the reins from head office is required. He also realises that to compete effectively with Boeing and other smaller, nimbler rivals in its other businesses, Airbus’s decision-making process has to be as streamlined as possible. And, even for a company the size of Airbus Group, it makes no sense to have overlapping and parallel functions at group and divisional level.
“We are bringing Team Airbus closer together,” says Enders. That is undoubtedly good news for the commercial aircraft operation. The question some might have is where it leaves helicopters and defence and space – businesses that until a few years ago enjoyed equal status, in corporate structure terms if not in revenues, with their dominant commercial aircraft sibling.
Source: Cirium Dashboard