Friday, June 03, 2011

Louis Gallois

For a Frenchman who presides over a world-famous aerospace brand and counts presidents, central bank chiefs and media tycoons among his peers there is not a sniff of Gallic hauteur about Louis Gallois.

A graduate of the elite École Nationale d'Administration (ENA) in Paris, the 67-year-old gathered the stewardship of three major companies under his belt before taking on his biggest job: chief executive of the industrial conglomerate EADS, which has interests spanning defence, satellites and Airbus.

"I had fantastic opportunities and I was extremely lucky. That's the only thing I can say. It was not because I was the best. In each case I had the chance to be the guy who was needed."

Noting how 15 years ago he got the top job at SNCF, the French national rail operator, he adds wryly: "The chief executive of SNCF [Loïk Le Floch-Prigent] was in jail and they needed somebody. And nobody wanted it."

Nor was there much design in his appointment to EADS either, when he was drafted in five years ago amid production delays with the A380 superjumbo airliner and an associated insider-dealing scandal. Gallois has the background that would allow him to be parachuted into most big jobs without concern. ENA has groomed titans of French politics, finance and industry including the former French president Jacques Chirac, Jean-Claude Trichet, head of the European Central Bank, and Jean-Marie Messier, the Icarus-like former boss of Vivendi Universal.


Gallois wears the privilege lightly. He happily handshakes his way around the staff at EADS's London office before the interview, not, you sense, out of noblesse oblige. After all, this is someone who contemplated retiring and opening an antique bookshop before EADS came calling. It is too simplistic to equate his good manners with his strongly held socialist beliefs, but Gallois drives this multinational beast with French principles. "You could say that I am a republican in the French sense of the word, which is not the American one. You know the motto of France: liberty, equality and brotherhood." Even French rail unions – imagine the RMT with sharper elbows – were won over.

Working at the top of EADS should come naturally to someone schooled to walk the corridors of power. Its Airbus subsidiary provides aeroplanes for scores of well known airlines from British Airways to Emirates. EADS is also part of the Eurofighter consortium that is battling France's Rafale for a £6.1bn deal to sell 126 military jets to the Indian government, while customers of its defence business, Cassidian, include the UK and US governments, and the Astrium space division runs the UK Ministry of Defence's satellites. Last year revenues were €45.7bn (£40.4bn).

Shareholder diplomacy is important too, because EADS ownership must be balanced between the 22.5% stake of France's Lagardère group and the French state; a grouping of Daimler and German banks with a further 22.5%, and the Spanish state with 5%. Britain sold its 20% stake in Airbus in 2006.

The only semblance of a chill comes when Gallois is asked if he enjoys the politics involved in running EADS. Christian Streiff quit as Airbus chief executive after 100 days in 2006, saying that balancing French and German interests was impossible, adding: "I hope my resignation will be a salutary shock."

Gallois, flattening the question politely, is keen to keep politics out of it. Acknowledging that governments are important EADS customers, he says they do not interfere as shareholders. "I cannot say that the politics are interfering in the management of the company. I cannot say that. I know that I have to protect the balance inside the company: French, German, British and Spanish. I know that, but I am not receiving phone calls from any government on any topic."

Nonetheless, it is impossible to talk about EADS and not touch on political issues, since it is a huge firm exposed to defence spending cuts in the western world, sensitive to fluctuations in the euro and, as a multinational, reliant on business-friendly environments in a range of countries. On this point, Gallois has no complaints regarding Britain, where EADS is a major employer, including the Broughton Airbus site in Flintshire, north Wales; the Filton Airbus site in Bristol and 23 other sites around Britain.

When the company's 17,000-strong UK staff are mentioned, interrupts. They are at the top end of industry, he says: "High-technology people, skilled workers, engineers. We are spending more than a lot of British companies on research and development."

The seemingly interminable saga over reductions in Britain's £37bn defence budget is not a problem for EADS either, Gallois adds, because the coalition government has laid out its spending plans until 2015 already. "What we appreciate in the UK is we know exactly where you are." He adds: "We receive the support we need for research on the UK in defence. The UK is not at a disadvantage compared with France, Germany and Spain. It is a good base to do business."


Of greater concern to Gallois is the euro. EADS trades in euros but it sells planes in dollars so the stresses and strains of the eurozone, and its currency fluctuations, play havoc with planning. Gallois is confident that the eurozone will not break up and a solution will be found for Greece.

"Greece is small," he says. "It means we have the capacity to find a positive outcome to this crisis and I think we need it to strengthen the euro. You know we are not for a too-strong euro [to aid exports] but we need a sustainable common currency." In the long-term, he adds, the world needs a more stable currency market: Airbus aircraft jets are bought in dollars while most of EADS's 122,000 staff are paid in euros. A weak dollar and a strong euro is an excruciating combination for EADS.

Airbus exemplifies EADS's global footprint. It employs 52,500 people in the US, China, Japan, the Middle East and its Toulouse base, and its jets fly all over the world. The success of Airbus – it had sales of nearly €30bn last year – is one of the reasons why Gallois is determined to push into emerging markets, which he describes as calls the third pillar in the group's growth strategy. "We want to balance commercial aircraft manufacturing, which represents 65% of our activities, with other activities to reduce the risk we are taking with aircraft."

The interview took place before last week's interim report into the Air France Airbus crash in the Atlantic two years ago but Gallois declined to make a detailed comment about the disaster, which killed all 228 passengers and crew. "We have to know what happened," he says, reserving judgment until the final report later this year.

The report by France's BEA air crash investigation agency indicated that the A330 pilot, confused by conflicting speed signals in the cockpit, mistakenly slowed the plane down into a stall that could not be arrested. Airbus had a scare last year when a Qantas-owned A380, the world's largest and most modern passenger plane, suffered an engine blow-out over Indonesia. Luckily, the ruptured engine disc blew three holes in the wing and not the fuselage. Rolls-Royce, Britain's own industrial powerhouse, has spent £56m so far on rectifying the problem.

Gallois says the A380 came out of it well: "We are always alarmed when we have an incident and this one was significant. We had three shocks and the aeroplane was certified to receive one shock not three. We demonstrated the resilience of the aeroplane."

Gallois steps down next year with the German chief of Airbus, Thomas Enders, his most likely replacement. There has been less tumult under his leadership, reflecting his modest, mandarin style. In a last attempt to get politics into the conversation, Gallois's bonus is raised. In 2008 he gave an estimated €1m to charity, with a further €1m expected to be given away this year.

"I think when you are gaining a lot of money it is creating some duties in front of society. It is my opinion – it is absolutely personal, it is not a criticism of other people. I feel more comfortable. It is a way for me to stay free."

Louis Gallois

Born 26 January 1944

Education Economics at École des Hautes Études Commerciales (HEC); École Nationale d'Administration (ENA)

Career 1972-89: Posts in ministries of economy and finance, research and industry, and defence; 1989: chairman and chief executive of engine-maker Snecma; 1992: chief executive, Aérospatiale [predecessor of EADS]; 1996: chief executive, SNCF; 2006: co-chief executive, EADS; 2007: chief executive, EADS

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