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EADS: The Boardroom Battle at Europe's Aerospace Giant



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Code : GOV0020

Year :
2005

Industry : Aircrafts and Ship Building

Region : Europe

Teaching Note: Not Available

Structured Assignment : Not Available

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Introduction: In mid-2005, the board of directors of European Aeronautic Defense and Space Company N.V (EADS), Europe’s largest and the world’s second largest aerospace firm, with sales of € 31.8 billion4 in 2004, faced a leadership crisis. The board was unable to formalize the appointment of its co-CEO elects (EADS has two CEOs to represent its French and German shareholders) in its meeting on June 7th, 2005. In this meeting, the board was expected to confirm the appointment of Frenchman Noel Forgeard (replacing Phillipe Camus) and German Thomas Enders,5 (replacing Rainer Hertich) as co-Chief Executives of EADS and another German, Gustav Humbert,6 as the CEO of its flagship company Airbus7 . It was noted that the failure of the German and the French shareholders to arrive at an agreement on the future management structure of EADS and the division of responsibilities between its co-executives hampered the decision-making of the company’s board.

Although Thomas Enders said “that has no impact on the business”,8 vital decisions were being delayed. For example, choosing the site to set up a plant through joint venture between EADS and NorthropGrumman9 and the company’s plans to expand into USA, Asia and Russia through partnerships and acquisitions were being halted as the EADS board was absorbed in resolving the leadership issue. Reuters reported - “‘It’s not in the bag yet’, a French source close to the talks said, ‘There won’t be a deal as long as they (the Germans) don’t accept that there should be a full balance.’” 10 A crisis of this nature was predicted by analysts as early as in 2001, when the company was in its infancy, due to conflicting national interests of the owners of EADS and the dual command of the company.

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