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October 8, 2007

EADS is in deep trouble

Analysis of: Airbus flies into ‘insider dealing’ row | business.timesonline.co.uk
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Doug McVitie, MA, Founder & Chief ConsultantDoug McVitie, MA
Founder & Chief Consultant, Arran Aerospace
Implications: The primary goal of investors is to profit from their share dealings. Apparently somebody forgot to point out to EADS that the primary goal of company executives is not meant to be the same thing, not while they've a difficult job to do first anyway.

Analysis: There are opinions and weasel words galore about EADS, Airbus, the A380, the A350, government subsidies, boardroom duopolies, Franco-German mistrust and so much political interference you could forget EADS/Airbus is a business not a job-creation and personal-enrichment scheme for crooks and cronies...

So, here instead are 10 questions about EADS/Airbus. The very fact they can reasonably be asked shows there's something terribly wrong with this company:

1) why is Airbus on its fifth ceo in three years?

2) are all EADS divisions such basket cases?

3) do the French and Germans know the difference between the concepts of overseeing and oversights?

4) how can you run a company properly when your paymaster is politics?

5) where does the buck stop -- Paris, Bonn or both?

6) how do you reconcile executive enhancement, possibly by illegal means, with massive shopfloor redundancies?

7) apart from the exchange rate, Japanese & Chinese export policies, the European Central Bank, massive cost over-runs, program delays and airplane-design issues, the weather and the price of fish, EADS and Airbus management have been doing ok, right?

8) Airbus builds good planes but has been badly mismanaged in recent years, so can EADS separate from it quickly enough to avoid being dragged down with it as this latest insider-trading fiasco and its long-stuck corporate share price suggest is already beginning to happen?

9) if you think the answer to all EADS/Airbus problems is more government intervention, go to Question 37; if you don't, what next?

10) and what if anything can prevent the break-up of EADS now?


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