France, Germany seek to resolve splits over EADS

TOULOUSE, France, July 16 (Reuters) French and German leaders meet today to discuss shaking-up European aerospace giant EADS in a bid to restore order to a company plagued by years of politically driven in-fighting.

Rivalry between French and German camps inside the parent company of planemaker Airbus is widely blamed for delays to the world's largest airliner, the Airbus A380 superjumbo, and has strained the two nations' political and economic relations.

French President Nicolas Sarkozy and German Chancellor Angela Merkel spoke twice by telephone over the weekend ahead of their meeting at Airbus headquarters in the southwestern French city of Toulouse to try to work out a deal.

Both sides would prefer to scrap the firm's complex dual management structure, but officials have struggled to reach consensus on who should keep the top jobs at EADS and Airbus, which generates most of its revenue.

"Changing people is important but it's not essential. The main thing is changing the way of governing the company, getting out of this situation in which all powers are shared equally," Henri Guaino, an advisor to Sarkozy said on France 2 television.

"The main thing is to make EADS a normal company that functions normally where each shareholder has its part in management," he added.

EADS is jointly controlled by French and German interests including the French government with 15 per cent and French conglomerate Lagardere with 7.5 per cent. Car firm DaimlerChrysler controls the 22.5 per cent German stake.

CROWN JEWELS EADS currently has two chief executives, France's Louis Gallois and Germany's Tom Enders. France's Arnaud Lagardere and Daimler's Ruediger Grube share the chairmanship.

Adding to the complexity, Gallois also runs Airbus.

Sources close to the talks have said a leading scenario would involve Gallois keeping Airbus, the crown jewels of EADS which apart from a brief period has always been under French control, while Enders would stay on as the sole CEO of parent EADS and Lagardere, son of the co-founder, would be chairman.

But Gallois was said to be reluctant to report to the younger Enders and Germany's Frankfurter Allgemeine Zeitung and France's La Tribune reported DaimlerChrysler has proposed the reverse, putting Enders at Airbus and Gallois at EADS.

Sarkozy met Airbus workers and called for changes to the way EADS was run when he was elected in May, following a campaign marked by public outcry over Airbus job cuts and squabbling between Paris and Berlin over the way they were shared out.

A senior German government official said Merkel, conscious of preserving a delicate German-French power balance at EADS, was not in a hurry to conclude an agreement.

"There is no time pressure," the German official said.

Sarkozy's energetic lobbying for a deal reflects French political frustrations that the French state has limited power in the running of EADS, even though it owns 15 per cent.

German weekly Wirtschaftswoche said on Saturday that Merkel was getting worried about the various plans and declarations by Sarkozy.

Not only does he want to move fast on EADs, but he has also openly blamed the strong euro for the woes of the group and has urged action from the European Central BAnk (ECB).

Sarkozy and Merkel are due to make a joint declaration around 0645 IST before a second round of talks in the afternoon.

Reuters SW DS1135