Since Tom Enders became CEO of European aerospace giant Airbus in 2012, he has sought to shake up nearly every corner of the company in an aggressive effort to make its culture more innovative.
But it seems those efforts could be derailed, due to a double whammy of bad news hitting the main rival of U.S.-based Boeing. The first blow came last week when the company confirmed that CTO Paul Eremenko was leaving to take a job with a U.S. aerospace company. Coming from Google, Eremenko was seen as a shocking choice for the CTO (chief technology officer) role. And his attempts to inject Airbus with Silicon Valley-style disruption reportedly ran into significant headwinds.
More significantly, however, it seems that Enders’ job could be on the line, thanks to a corruption scandal that has been unfolding over the past several months. In a story initially uncovered by the Guardian newspaper, the company stands accused of having created secret subsidiaries to launder money in order to reduce its taxes. Airbus is also under investigation by Britain’s Serious Fraud Office for possibly having used secret intermediaries to secure financial help from the British government and then lying about it. Earlier this month, Airbus announced it may have broken U.S. corruption laws, as well.
Airbus has its corporate headquarters in the Toulouse region of southwest France. Local media here are reporting that Enders, who has been implicated in some of the shenanigans, will be addressing representatives of employees tomorrow. That, and reports that the company has hired a headhunting firm to find a new CEO, have prompted speculation that Enders will soon leave the company.
If so, it marks a bitter blow to the career of someone who sought to reinvent one of Europe’s most storied, and economically important, companies. Airbus is jointly owned by the governments of Spain, Germany, France, and the U.K., though they are no longer controlling shareholders, and the company now operates as an essentially private enterprise.
Airbus has been locked in a decades-long wrestling match with Boeing over the world’s airplane and aerospace markets.
But Enders has sought to imbue Airbus with a more radical vision of the future of transportation. Speaking at the DLD conference in Munich in January 2016, Enders announced a partnership with Uber to create a trial for an on-demand helicopter service. The previous year, Airbus had struck a deal to build the satellites for OneWeb, the Virgin-backed effort to create a space-based internet system. Airbus had also created a network of accelerators called BizLab that same year.
Enders’ rationale for this frenzy of activity is simple: As barriers to entering the commercial aircraft industry crumble, the space is attracting more startups and investment capital. In an age when technologies like GPS and gyroscopes — once the domain of the aeronautics industry — are now being built into smartphones, the threat of disruption is mounting.
“Elon Musk, [when] he started in the space business 10 years ago, we didn’t take him seriously,” Enders said at DLD in 2016. “And only 10 years after, he is really disrupting the space business. And when I met him in the spring last year, I thanked him for that because it was a big wake-up call for those of us in the traditional space industry to do [things] differently.”
Part of that radical overhaul included opening a venture capital office in Silicon Valley, as well as an innovation lab there, dubbed A³, or A-cubed. To oversee the creation of the lab, Enders hired Eremenko, a Google engineer then best known for leading the Google team that had begun developing Project Ara, a modular smartphone designed to allow complete personalization of the hardware.
“Airbus is at a good place in its history,” Eremenko told VentureBeat in May 2016. “I think anytime a company is doing well, there is a danger of complacency. Our CEO has been a good source of thinking about what disruptions are coming that we’re not seeing.”
Just a few weeks after that interview, Enders shocked the aerospace industry by announcing that the then 35-year-old Eremenko would become CTO of the entire company. This left many slack-jawed, particularly in France, where age is tied to wisdom and still typically considered obligatory for leadership positions. That Eremenko hailed from Silicon Valley seemed doubly alarming.
Of course, in many ways, that was likely the reaction Enders wanted. Since hiring Eremenko, Airbus has continued to announce radical ideas, including a new modular transportation system, called Pop.Up, that combines autonomous cars and drones. The company has also been expanding use of 3D-printed materials in its aircraft.
But Eremenko’s aggressiveness has, unsurprisingly, ruffled feathers. According to local Toulouse newspaper La Dépêche, hiring Eremenko is widely considered one of Enders’ “most-criticized” decisions. The newspaper added that Eremenko’s call for disruption did not sit well with many Airbus employees. In particular, a decision to close a research lab in the Paris region angered many in the research division, according to the newspaper.
“What he managed to do is break Airbus research,” François Vallin, a union leader for Airbus employees, told La Dépêche.
Late last week, Eremenko announced that he had left his job at Airbus to join U.S. aerospace company United Technologies Corp. In a statement, Eremenko attributed the decision largely to personal motives, citing the challenges of splitting his time between France and the U.S. He did not address any possible unrest nor the corruption controversies.
— Paul Eremenko (@PaulEremenko) November 30, 2017
In a statement, Enders thanked Eremenko for his work.
“I am grateful to Paul for his service to Airbus. He initiated a challenging transformation of our approach to research, technology, and innovation with, for instance, more open innovation and partnerships, the introduction of new methodologies, demonstrators, and innovation centres,” Enders said. “Airbus will continue to pursue the directions Paul pioneered to generate greater value in our processes, products, and services, and ultimately for our customers. We wish Paul every success in his future endeavors.”
The company also announced that it has appointed Marc Fontaine, currently the company’s digital transformation officer, as Acting CTO while it searches for a permanent replacement.
But with these clouds hanging over Airbus, it may be challenging to move forward with any majorly disruptive efforts. The real question may be whether this turmoil ends up being a simple speed bump for Airbus or whether the company’s executive and board seek a more conservative path of retrenchment going forward.