Paris-Berlin feud at EADS sees German CEO quit

6th December 2004, Comments 0 comments

PARIS, Dec 6 (AFP) - The surprise departure announcement by EADS co-chief executive Rainer Hertrich, who represents German interests in the company, comes at an awkward time for the aeronautic, defence and space group as it grapples with key decisions this week.

PARIS, Dec 6 (AFP) - The surprise departure announcement by EADS co-chief executive Rainer Hertrich, who represents German interests in the company, comes at an awkward time for the aeronautic, defence and space group as it grapples with key decisions this week.

"The group could enter a period of turbulence, with the management issue topping four other subjects of concern" - high oil prices, the weak dollar, lower profitability from orders by low-cost airlines and rising research and development costs, said analyst Antoine Boivin-Champeaux at French brokerage CA Cheuvreux.

Shares in the European Aeronautic Defence and Space Company fell 0.81 percent to EUR 23.26 Monday on the Paris stock exchange, while the CAC 40 index of leading shares lost 0.43 percent overall.

Thomas Enders, a board member responsible for defence activities at EADS, is to replace Hertrich as one of two chief executives when the latter steps down in July 2005, a source close to the matter told AFP on Monday.

Hertrich's announced departure is also awkward for EADS' civilian aircraft unit Airbus, which must define a strategy to deal with competition from its US rival Boeing.

For analysts at the French brokerage Fideuram Wargny, the move was set against a background of an "influence struggle between French and German interests."

They said: "These disagreements don't come at the right moment for EADS, which must decide the fate of the A350, the likely future rival of Boeing's 7E7, or even a tie-up with (defence electronics group) Thales, even though this possibility has diminished."

Another French analyst who asked not to be named said Hertrich's departure was more the result of his quarrel with Airbus chief executive Noel Forgeard than a disagreement over group strategy.

Hertrich has been highly critical of Forgeard's ambitions to replace the other EADS co-chairman, Philippe Camus.

"I remain convinced that a tie-up with Thales is in the cards and that it could be negotiated with German shareholders," the analyst said.

Speculation over a possible merger of Thales and EADS, which would create a European group big enough to take on Boeing, has intensified in recent weeks even though executives from both companies have dismissed a tie-up for the time being.

The French government in particular, which holds 31.3 percent of Thales and 15 percent of EADS, is believed to favour such a move, even if French President Jacques Chirac and Camus have denied any such plans.

But, "if Hertrich leaves, Camus is really destabilised, the only positive point is that Enders' nomination consolidates the principle of joint management," the anonymous analyst said.

Enders, who turns 46 on December 21, is a close ally of Juergen Schrempp, the head of German-US auto giant DaimlerChrysler which holds a 30.07-percent stake in EADS.

A former board member of DASA, the German aerospace company that was folded into EADS, Enders also worked on the German defence ministry's planning committee between 1989 and 1991.

For Jean-Pierre Maulny, deputy director of the Institute of International and Strategic Relations, "everything is complicated by the fact that it's a company with defence activities and so states closely watch what is going on."

"Maintaining a two-headed structure corresponds more to sovereignty imperatives than to the running of a classic enterprise."

© AFP

Subject: French News

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