Airbus future hangs on a wing and a prayer

Anyone involved with Airbus – however remotely – must be praying the latest unseemly management dispute will be resolved before even more damage is done to the credibility of Europe’s flagship aircraft manufacturer.

The Franco-German shareholders and their respective governments are again at each other’s throats. And once again, it is all about power. This rivalry simply has to stop if Europe wants to keep a civil aviation industry capable of taking on Boeing.

Christian Streiff, the former Saint Gobain executive brought in barely three months ago to fix Airbus, has done himself few favours by adopting a brash approach to his task. It was probably a mistake to push for complete autonomy to implement a radical restructuring of the entire Airbus system and a draconian cost-cutting programme all at once.

Perhaps it would have been best to concentrate first on resolving the industrial and technical problems bedevilling the A380 superjumbo.

Mr Streiff may have thought that once in the job, he could force the hand of his Franco-German shareholders. But this was frankly pretty naïve.

There was nothing wrong with his diagnosis. His problem was that he was a rank outsider – both in the aviation industry and in the arcane world of politics.

Worse, his candid warning that it would probably take at least 15 years for Airbus to catch up with Boeing again was not the sort of message his customers, investors and core shareholders wanted to hear.

All this as the French presidential election campaign gains momentum, Germany’s grand coalition is struggling to protect domestic employment, and Franco-German relations have never been so strained.

Louis Gallois, the former head of the French railways, was called in to rescue EADS this year after the Airbus parent was shaken by the stock option controversy that ultimately cost the job of Noel Forgeard, the French co-chief executive of EADS and former Airbus boss. Mr Gallois, who also at one stage ran the French Snecma aero-engine group and then the Aerospatiale group before it was merged with Lagardere, is now also set to take direct charge of Airbus.

Mr Gallois is well respected in the French aviation industry and appears to be getting on with Tom Enders, the German co-chief executive at EADS. During his time at the French railways, he showed great skill in dealing with complex labour issues.

But the current Airbus situation risks stretching even the likes of Mr Gallois. As this column has previously suggested, EADS should seriously consider following Boeing’s example. When it was facing its own crisis, the US group recalled from retirement veteran manager Harry Stonecipher to sort out its problems.

Airbus could now call back Jean Pierson, who ran Airbus from 1985 to 1998 before handing over to Mr Forgeard, to give Mr Gallois a helping hand. Both have a lot of respect for each other. They worked together when Mr Gallois was at Aerospatiale and Mr Pierson at Airbus.

Whether the Germans would buy it is another question.

Road rage

The Italian government seems to be doing everything it can to upset the country’s business community. Even Tommaso Padoa-Schioppa, the Italian finance minister and respected former central banker, managed to get booed when he addressed a weekend conference of Confindustria, the Italian employers’ association.

His defence of the government’s controversial 2007 budget appears to have touched off an even worse confrontation with Confindustria members than the one former prime minister Silvio Berlusconi caused this year when he suggested business would be crazy to vote for his rival Romano Prodi.

Some of Mr Prodi’s business supporters may well be regretting how they voted, judging from the almost daily rows over government intervention in business affairs.

By far the most spectacular have been the vitriolic exchanges between the prime minister and Marco Tronchetti Provera. The former Telecom Italia chairman insists he told Mr Prodi of his radical plans to split up the telecoms group to focus on multimedia. The prime minister says this is not true.

The Benetton family had long kept its cool over the government’s efforts to sabotage the €25bn merger of their Autostrade toll motorway business with Spain’s Abertis.

Under pressure from Brussels, the government has backed down on a legislative proposal in its budget that would have restricted the Spanish company’s voting rights in the combined group to 5 per cent.

The European Commission is also expected to criticise Rome this month for its outright protectionist efforts to block the Spanish deal.

But the Benettons now appear to have had enough. They are threatening to take the government to court over its proposal to rewrite the original concessions under which Autostrade operates tolls.

An understandable case of road rage.

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