Aircraft maker calls in movers as power shifts to new headquarters

Source:Reuters Published: 2017/2/2 18:53:40

Airbus high-fliers to share space

A view of the interior of the wing production plant for the Airbus A350 aircraft at Airbus' factory near Broughton, the UK on December 1, 2016 Photo: CFP

A view of the interior of the wing production plant for the Airbus A350 aircraft at Airbus' factory near Broughton, the UK on December 1, 2016 Photo: CFP

After a top-level restructuring at Airbus come the musical chairs and a new logo intended to convey unity as the European giant aims to refocus its management without a return to past infighting.

In a symbolic move, the man in charge of making Airbus jets has reluctantly agreed to leave his office by the vast factories in Toulouse and move to a new corporate headquarters in the same southern French city, people familiar with the matter said.

At first sight, it might seem an obvious move following the restructuring in which the plane-making division became the mainstay of the overall structure of a company that also manufactures space rockets, helicopters and military jets.

But close watchers of the predominantly Franco-German firm, still bruised by decades of infighting, fear the decision to put plane-making chief Fabrice Bregier in the new headquarters alongside his boss Tom Enders could test a fragile internal power balance.

For Bregier, it may only be a move of about a kilometer on the ground, but it shifts him ever so slightly away from the company's economic nerve center that drives its share price, revenue and profits. And it comes at a critical time for the world's second largest aircraft maker as it strives to boost output.

"[Bregier] isn't happy, but he is going to make it work," said one person close to the company, who asked not to be named.

Airbus agreed in 2016 to merge its jetliner division with its parent group to reflect the stronger bias toward civil manufacturing that started in 2013, after the failure of a planned merger with British defense firm BAE Systems.

After the latest internal restructuring, Bregier gave up his title as chief executive of the Airbus commercial airliner business, but remained its president while also becoming chief operating officer and number two for the group as a whole.

"Airbus is now an aircraft manufacturing company with two other divisions, so after the merger the focus on the core business is much tighter," an Airbus spokesman said.

Enders, 58, is now drawing core people and functions around him at the new headquarters to secure his vision of forging the integrated company he believes is necessary to remain on a par with arch-rival Boeing and fend off new competition.

He has pledged to make Airbus a "normal company" after French and German political interference was curbed in 2014 by a change in its corporate governance following the failure of the BAE deal.

A key relationship

But plucking Bregier from a domain in which he is an undisputed leader - having overseen record plane output and an improved industrial performance - and accentuating his other role as deputy to Enders is seen by some as a potential loss of focus.

Airbus is confronted with the critical task of raising its jet output fast to fill thousands of orders on its books, and investors are especially sensitive to any risk its top managers become distracted by internal politics.

"What is unusual is to have restructuring happening at a time when production is increasing sharply," one European aerospace analyst said.

At the same time, a raft of top managers in the plane-making business involved in operations, sales, programs and engineering are nearing retirement age.

Publicly, Airbus managers have closed ranks behind the CEO's plans. Many recall the industrial chaos and tensions between French and German government shareholders - and their proxies in the company - that hammered Airbus shares a decade ago.

Enders, who is German, and Bregier, a 55-year-old Frenchman, have occasionally appeared uneasy partners. Both are major industry figures in their own right and aspire to the top job.

But they also demonstrated a pragmatic ability to work together from 2007 to 2012 at what was then the jet division of EADS, later renamed Airbus Group, again with Enders in the lead role.

The latest overhaul cements Bregier's position as heir apparent as he is now operational chief of the whole group, but it also means he may have to wait longer for the top job.

Both men have pledged to make jet production their top priority and company insiders say Bregier had initially suggested he would keep a physical presence in each camp to ensure this happened.

But his office move is just the latest example of a steady shift of key oversight functions toward the center, consolidating the power of Enders and prompting reports of fresh tension in one of the industry's key personal relationships.

Posted in: INSIGHT

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