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What's going on?
Airbus, the huge European aerospace company, is facing a potential leadership vacuum after its CEO said on Friday he would not seek an extension to his term.
What does this mean?
Airbus has done well operationally under its current leadership, building up a backlog of more than eight years of orders (like pizza, orders for aircraft are placed before they actually get put together). But Airbus is also facing a number of scandals, including the use of undisclosed middlemen to help sell planes (such middlemen have sometimes been used to pay bribes).
The damage has helped convince Airbus board that the company needs new leadership. Its current chief operating officer, the presumptive heir to the CEO throne, was told by the board on Thursday that he wouldnt get the CEOs job and he is now leaving the company too.
Why should I care?
For markets: The management reshuffle is a risk for Airbus stock, but a surmountable one.
A number of other senior Airbus execs have also parachuted out in recent months. However, the CEO wont depart until 2019, leaving the board time to find a replacement. It may also already have an internal candidate in mind, having just promoted the former head of its helicopter division to a bigger job. An uncertain leadership reshuffle is rife with distracting risks but with the business in decent shape (its stock is up 50% this year), Airbus is in a position to navigate away from the turbulence.
The bigger picture: The process will be fraught with political sensitivity.
The French and German governments each have an 11% stake in Airbus. They used to have positions on the board and exerted their influence over management appointments. A priority for the current management and board was to put Airbus on a flight path to greater autonomy from politics. That independence will be put to the test during this transition process.
Originally posted as part of the Finimize daily email.
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