December 15, 2017 / 6:18 AM / 4 months ago

Airbus board triggers shake-up to end succession row

PARIS (Reuters) - Airbus confirmed the departure of planemaking chief Fabrice Bregier as part of a series of board moves on Friday to clear the air over succession plans following weeks of speculation surrounding Europe’s largest aerospace firm.

The move gives rival Chief Executive Tom Enders a free hand for the rest of what will now be his last term as CEO, ending in April 2019, but also casts him as a caretaker as Airbus looks for fresh blood to lead it out of a growing corruption scandal.

Confirming details reported by Reuters, Airbus said Bregier would be replaced in February as president of the planemaking division by fellow Frenchman Guillaume Faury, the 49-year-old chief of Airbus Helicopters who has also worked in automobiles.

German-born Enders, who had earlier this year voiced interest in staying beyond 2019, will now step down at the end of his current term, saying it was time for “fresh minds”.

Shares in Airbus fell half a percent after the changes which left uncertainty over the future CEO role beyond 2019.

“This is a quite remarkable, and really rather sad, change of management,” said Agency Partners analyst Sash Tusa.

“It is likely in the near term to leave Airbus far more inward-looking than is healthy, with only CFO Harald Wilhelm in post for over 5 years,” he added.

“Fabrice ... was very popular with airlines for his rapid response and attention to details,” Peter Bellew, chief operations officer at Ryanair and former CEO of Malaysia Airlines.

Airbus officials denied speculation that Enders had a hand in his deputy’s departure and cited an independent board.

But analysts said the push for a fresh start had curtailed the ambitions of both executives, ending a troubled partnership at the helm of Airbus. Even so, many saw Enders as clear winner.

COLLATERAL DAMAGE

Enders in 2014 froze payments to middlemen and later shared an audit revealing misleading filings with UK authorities, but has seen his authority challenged as the discovery triggered UK and French fraud investigations and a backlash in France.

“It means two things: that despite his wishes, Enders could be replaced, and it would not automatically be Bregier,” a senior source with close links to the company said.

The overhaul is not directly connected to investigations but both men appear to have suffered collateral damage from the probes, which made their differences clearer, one source said.

The company said the board had acted to secure an orderly succession at the world’s second-largest planemaker.

During 2018, the board will look both inside and outside for a successor to 58-year-old Enders “in good time” for confirmation at the 2019 annual shareholder meeting, it said.

The shake-up came after Bregier, a 56-year-old who has long been seen as the natural heir to Enders, told the board he did not intend to be part of the selection process for 2019 and would therefore step down in February to “pursue other interests” - widely viewed as code for not being short-listed.

Enders said he would work to ensure a smooth transition.

However, both scarcely tried to mask tensions as Bregier recalled changes of title - a pointed reminder of a bitter feud with Enders - while Enders said he agreed with Bregier’s decision “and frankly, I would not have done differently”.

Some sources said Bregier had sought support from the French government and Airbus’s French chairman, prompting the board to show its muscle. But the selection process will remain under scrutiny from investors worried about any return to past efforts by shareholders France or Germany to tilt appointments.

“We believe the worst thing that could happen at Airbus in the coming 12-24 months is for evidence of political considerations coming to the fore,” Jefferies analyst Sandy Morris said.

Speaking in a joint news conference with German Chancellor Angela Merkel after a European summit, French President Emmanuel Macron said he would be vigilant about the changes and seek to balance national interests with those of the company.

An Airbus logo is pictured during the delivery of the new Airbus A380 aircraft to Singapore Airlines at the French headquarters of aircraft company Airbus in Colomiers near Toulouse, France, December 13, 2017. REUTERS/Regis Duvignau

Both he and Merkel ruled out trying to win special influence on the board.

Additional reporting by Victoria Bryan, Editing by Keith Weir and Elaine Hardcastle

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