Eads And Airbus

EADS & Airbus

Index

1-Background

1.1 Idea

1.2 EADS’ Creation

1.3 EADS’ Evolution

2- Business Model

2.1 EADS

2.2 Airbus

3- SWOT Analysis

3.1 EADS 9 page

3.2 Airbus

4- Recommendations

4.1 Airbus

4.2 EADS

5- Information sources

1-Background

1.1 Idea:

In spring of 1999, Jean-Luc LagardÐ"Ёre (Chariman of LargardÐ"Ёre Group, one of the most important groups in aerospace and publishing field in France) had two daring and unexpected projects on mind.

In one side, he though on a merger between largest aerospace and defence groups in France, Germany and Spain. The second project was to build the biggest aircraft ever.

1.2 EADS’ Creation

Context:

German side:

Daimler Chrysler, parent firm of DASA (German aircraft maker firm), owned part of Airbus. His CEO, JÐ"јrgen Schrempp, wanted to maximize his own group. However, he though that if French government involved too much, it will make the project impossible.

French side:

Jean-Luc LagardÐ"Ёre, who had the idea, owned a one of aerospace firms in France. French government owned Aerospatiale, the other one important groups in this field which also had a part of Airbus. Lionel Jospin, who was the French Primer Minister then, was against privatization of any state-owned firm.

Process:

French government was so involved in aerospace firms and they didn’t want to privatize. That is why Shrempp started to talk with British aerospace PLC to merger with them.

If German and British merged, France would be outgunned of Airbus. Therefore, French government answered quickly. Jospin secretly planned to privatize Mantra (one of the aerospace groups) and merge with LagardÐ"Ёre group. In July 1998 the merger was announced and it was finally a fact in June 11 of 1999.

At the same time, the British PLC was merged with another British group and left German out of game. Because of that, Schrempp talked with LagardÐ"Ёre to merge DASA with Aerospatiale under the condition that French government had to leave the control of the firm.

Finally, on September 22 they worked on a deal and in October 13 Jospin and SchrÐ"¶der announced the merge.

1.3 EADS’ evolution

Since it was created on October 14 1999, the group has been managed in a dual structure; in order to balance the power on the corporation of both German and French. As it was an important project for both countries, their governments were really involved in it. They supported economically what supposed look for national interest rather than commercial interest. As a result, there was internal conflict which balked firm’s success. There was also another trouble come from French part, infighting among their own ranks.

In 2003 Jean-Luc LagardÐ"Ёre dead. He was the only one able to manage the situation controlling the French side and restore confidence to German shareholders. Once he dead, Mr Camus and Mr Foregeard (both LadargÐ"Ёre protÐ"©gÐ"©s) fought to be his successor. Mr Camus became the new CEO of EADS and Mr Foregeard managed Airbus. Then he started to put pressure on EADS boss (and on the German co-chief indirectly) to push him out.

Mr Foregeard won many orders for A380 that make delivery on time really hard. Moreover, while the normal time between first fly and delivery was two or three years, the A380 project deadline was one year.

In addition there were many problems with making process. The scarcity of engineers and the short deadlines made impossible to deliver on time (some times German engineers had to fly to France to finish their work there). But the worst thing was that anybody wanted to realise that the deadlines couldn’t be met.

Another big trouble (maybe the biggest) was that French and German were not really well coordinated. They were using different software to make the same plane. That meant a lot of problems and time wasting to adapt each other.

In 2003 their suppliers were also exceeded and they couldn’t meet the schedule.

As a result of all, the insiders and also the costumers felt the company was going on the wrong direction.

Boeing, Airbus main competitor, tried to take advantage of the European aircraft maker’s situation. They launch a new aircraft called 787 Dreamliner. In December 2004 airbus launched a new plane, A350, to answer them. It was a not really risky project and it was a success (their sales were good) but the costumer still saw Boeing aircraft as better.

Mr Foregeard, relying on his performance on Airbus, force Mr Camus to bow out and consequently, his German counterpart. That won the enmity of DaimlerChrysler who thought French government wanted to snatch control of EADS.

After more delays in A380 delivery, Mr Foregeard was also gone and Mr Streiff replaced him. The new manager of the project realized that anybody wanted tell each other the truth. To solve it he demanded more freedom but German didn’t give him and he also left the group.

Recently, Louis Gallois, who once ran AÐ"©rospatiale, was named chief executive of both Airbus and of EADS (where share the post with Tom Enders). This change gave the control of Airbus to French while German got the control of Eurocopter (EADS subsidiary).

Nowadays, Mr Gallois and Mr Enders are implementing a restructuring plan, called Power8,