Airbus Plans Management Changes to Integrate Plane Division

Airbus's next-generation A350 plane takes off from Toulouse-Blagnac airport, southwestern France, on its first test flight on June 14, 2013, in a milestone for an airliner that the firm hopes will challenge Boeing's 787 Dreamliner in the lucrative long-haul market. The A350 -- more than half of which is made of light composite materials that reduce fuel costs -- was crewed for its maiden flight by a British and a French test pilot assisted by a flight engineer and three other engineers at the back. AFP PHOTO / ERIC CABANIS (Photo credit should read ERIC CABANIS/AFP/Getty Images)
Photograph by Eric Cabanis—AFP/ Getty Images/ File

Airbus Group chief executive Tom Enders plans to complete the integration of Europe’s largest aerospace group by sweeping away overlapping functions and appointing planemaking chief Fabrice Bregier as its chief operating officer, people familiar with the matter said.

The proposal is part of plans to refocus the group and give a clearer definition of its biggest unit’s responsibilities under a new subsidiary name, likely to be Airbus Commercial, while cutting costs as it faces widening global competition.

Currently president and chief executive of Airbus SAS, which is the planemaking division of Airbus Group, Bregier would take on the additional role of chief operating officer of the parent company under the proposals, which may be finalized in October.

He would remain president of Airbus Commercial but drop the chief executive mantle in that part of his job, the people said, in a change of job description earlier reported by Bloomberg.

Airbus declined to comment.

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Relations between German-born paratrooper reservist Enders and French former missile maker Bregier have long been seen as workmanlike but frosty, prompting speculation about Bregier’s future at the world’s second-largest aerospace company.

His expanded role is likely to ease those tensions, at least for the time being, people close to the company said. Other senior managers may be given group-wide roles.

“It does resolve some of those problems. It is never good to have senior managers fighting,” a person familiar with the company said.

The finance and human resources chiefs, who currently split their time between the group and airplane unit, will become unified bosses of their respective areas for the whole group.

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Frenchman Marwan Lahoud, the architect of previous governance changes which curbed French and German government influence and created the conditions for integration, would continue to oversee strategy and M&A.

The governance changes in 2012 did away with awkward Franco-German power-sharing structures and led to a rise in shares.

Shortly afterwards, Airbus Group changed its name from EADS to capitalize on its best known brand and create a tailwind behind Enders’ efforts to unify the fragmented group.

But under a clumsy compromise blamed by many on remaining personal and national sensitivities, the core Airbus brand remained with the planemaking unit, blurring efforts to present one voice to investors and customers across the world.

Analysts say the changes should make it easier to drive through group-wide cost reductions without revisiting the political need for factories in several European countries.

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The company is considering whether to complete its rebranding by calling the whole group “Airbus” and getting rid of the planemaking unit’s separate French “SAS” corporate structure, though that may also pose legal uncertainties.

Another dominant figure, Airbus commercial sales chief John Leahy, 66, who has led the charge against Boeing in the $100 billion jet market for over 20 years and recently talked of retirement, will stay in his role at least through the end of 2017 or early 2018, the people said.

His eventual successor has not yet been publicly designated but leading candidates include a lieutenant from within his department, Kiran Rao, signifying a change of style from Leahy’s frequent public baiting of Boeing but no let-up in brutal jet-market competition, the people said.

None of the executives could be reached for comment.

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