Product details

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Abstract

After a record order intake year in 2005, 2006 was prone to be a fine year in the aerospace industry, and especially for Airbus and its mother company EADS (European Aerospace & Defence and Space Company). However, events in 2006 suddenly changed this European champion, courted and praised by all Western European politicians and beyond, into a company entangled in corporate scandals, apparently not able to co-ordinate internally and having inflicted on shareholders a massive stock hit by at minimum 30%. Scandals ranged from: (1) strange political affairs namely in the Clearstream case; (2) power struggles for the top job resulting in bitter fights and resented executive and political behaviours; to (3) the exercise of stock-options by executives and senior management in what was apparently a massive insider-trading affair, directly or indirectly backed by some of the main founding countries'' governments. Critical failures in the ability to co-ordinate spiked in the A380 programme as it developed more than 2 years delay to deliveries. This resulted in a 3 billion euros immediate hit on the 2006 EADS bottomline, turning a 10% profit margin company into a loss-making one. The payback threshold for the A380 programme business case doubled. The effects were far-reaching, the supply-chain was dislocated, employees were torn between working hard to catch up on delays of a year, for reasons that they could not fathom and the fact that there would be no interest labour dividends for the coming years. Leadership, corporate governance and ethics, the shareholder base, and governments and public statespersons were thrown into a seemingly bottomless downward spiral. How would EADS, Airbus, its shareholders and other stakeholders need to react to recover this situation? Where should they start, and how could they maximise value under the particular history, shareholder structure, and political environment of EADS and Airbus?
Industry:
Size:
57,000 employees
Other setting(s):
2006-2007

About

Abstract

After a record order intake year in 2005, 2006 was prone to be a fine year in the aerospace industry, and especially for Airbus and its mother company EADS (European Aerospace & Defence and Space Company). However, events in 2006 suddenly changed this European champion, courted and praised by all Western European politicians and beyond, into a company entangled in corporate scandals, apparently not able to co-ordinate internally and having inflicted on shareholders a massive stock hit by at minimum 30%. Scandals ranged from: (1) strange political affairs namely in the Clearstream case; (2) power struggles for the top job resulting in bitter fights and resented executive and political behaviours; to (3) the exercise of stock-options by executives and senior management in what was apparently a massive insider-trading affair, directly or indirectly backed by some of the main founding countries'' governments. Critical failures in the ability to co-ordinate spiked in the A380 programme as it developed more than 2 years delay to deliveries. This resulted in a 3 billion euros immediate hit on the 2006 EADS bottomline, turning a 10% profit margin company into a loss-making one. The payback threshold for the A380 programme business case doubled. The effects were far-reaching, the supply-chain was dislocated, employees were torn between working hard to catch up on delays of a year, for reasons that they could not fathom and the fact that there would be no interest labour dividends for the coming years. Leadership, corporate governance and ethics, the shareholder base, and governments and public statespersons were thrown into a seemingly bottomless downward spiral. How would EADS, Airbus, its shareholders and other stakeholders need to react to recover this situation? Where should they start, and how could they maximise value under the particular history, shareholder structure, and political environment of EADS and Airbus?

Settings

Industry:
Size:
57,000 employees
Other setting(s):
2006-2007

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