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Tom Enders was not a typical chief executive. He had been in the German army and reached the rank of major in the reserves. He was a qualified pilot and loved skydiving. In 2010 he was one of the first people to skydive out of Airbus’s new A400M military plane.
He was also a born optimist. This gave him the confidence to try things that others wouldn’t. But it also meant he could get frustrated with bureaucracy and people dragging their feet. One place he found this was politics. Enders and politics were not a natural fit.
In the summer of 2012, Enders, now 53 years old, had just been given the biggest job of his life. He was chief executive of EADS, the European Aeronautic Defence and Space Company, which was the owner of Airbus, one of the biggest planemakers in the world alongside Boeing.
Despite only becoming boss in June, Enders was ready to do something audacious. He wanted to merge EADS with BAE Systems, Britain’s biggest defence group and the maker of the country’s nuclear submarines and fighter jets.
This task would not only require the backing of the companies’ shareholders but the support of the UK, German and French governments. Enders the optimist was ready to take this on, despite his unease with politics.
Before pressing ahead with the talks, however, Enders went hang-gliding.
Given his love of extreme sports, this was not particularly unusual. But the consequences would be significant.
Enders had an accident. He crash-landed the glider and injured his arms. He had to cancel a trip to China with Angela Merkel, the German chancellor.
Missing this trip would cost Enders a vital opportunity to build relations with Merkel.
‘An astonishing piece of strategic myopia’
Airbus was founded in 1970 as a European competitor to Boeing. The German, French and Spanish governments were all involved. The UK initially declined the chance to be part of the project. It was concerned about the cost of the separate Concorde initiative - into which it had invested more than £1 billion developing a supersonic jet - and was considering a domestic alternative that could have involved Rolls-Royce and British Airways.
However, nearly a decade later, the UK joined the project. Airbus needed the UK’s expertise in wings for the new A310 aircraft. It wanted Hawker Siddeley, which was state-owned and part of British Aerospace, to develop smaller wings for the plane.
The UK government agreed a deal that would see the country take a 20 per cent stake in Airbus in return for building the wings and helping to finance the project. This deal was done in 1979.
The partnership was a success. The UK became the hub for Airbus wings, which were then shipped to Toulouse in France, where the planes were assembled. Airbus became a true European rival to Boeing.
However, just over 25 years later, in 2006, the UK stake was sold. British Aerospace had become BAE Systems plc by this point. It was no longer a state-owned entity but a publicly-listed company increasingly focused on expanding its defence business in the US. And there were concerns about the mounting costs of Airbus’s A380 superjumbo project.
BAE sold the stake for £1.9 billion back to EADS, now the parent company of Airbus. Thousands of British workers would continue to work for Airbus and make wings for the planes at its factory in Broughton, North Wales. But the UK would no longer have a direct stake in the business.
David Davis, the Conservative MP, later described the sale of the Airbus stake as “an astonishing piece of strategic myopia” and a “hideously short-term decision”.
But people at the time questioned it too. For instance, Will Hutton wrote in The Observer that it was “strategically stupid, technologically vapid and deeply depressing.”
History has not been kind to this deal, at least in financial terms. Today a 20 per cent stake in Airbus is worth around £25 billion.
The exit of the UK left EADS and Airbus dominated by French and German interests. Both held a 22.5 per cent stake in the business. France’s was held by the government and the media group Lagardère. Germany’s was held by Daimler, owner of Mercedes-Benz. The Spanish government held a 5.5 per cent stake.
This all meant that the governments wielded control over EADS and its key decisions. France and Germany squabbled over the nationality of the chief executive, the base for the head office, and where key investments in research and development were made. There were concerns in Germany that its influence over the company was waning as Airbus aircraft were assembled in France.
Enders was tired of all this interference. He wanted EADS and Airbus to behave like a commercial company free of political meddling. And he wanted to be able to beat Boeing.
A deal with BAE offered a way to do this. And it gave the UK a chance to rectify its mistake.
