French rail chief poised to step in at EADS

Louis Gallois, the head of the French railway SNCF, is poised to take charge at EADS in a bid to end the turmoil at the Franco-German aerospace giant caused by production delays at its Airbus subsidiary.

M. Gallois, who also ran France's former state-owned defence group Aérospatiale before it merged with Germany's Dasa to create EADS, was said by SNCF sources to be on the verge of being parachuted in following the shock profits warning from the company a fortnight ago.

His appointment, if confirmed, will spell the demise of Noel Forgeard, one of EADS's two co-chief executives. M. Forgeard has been clinging to his job since the revelation of delivery delays on the Airbus A380 and the disclosure that he and members of his family made a €2.3m (£1.59m) profit by trading in EADS shares just a month before Airbus became aware of the difficulties affecting the A380 programme in April.

Last night, however, the French and German governments were still wrangling over management changes to EADS which could yet scupper the appointment of M. Gallois. The company has a cumbersome board structure involving joint chairmen and chief executives nominated by its core French and German shareholders.

One option floated over the weekend was for M. Gallois to become the sole chairman of EADS in return for which Tom Enders, a German who acts as the company's other co-chief executive, would become its sole chief executive. But this is said to have been vetoed by Arnaud Lagardère, one of EADS's current chairmen along with Manfred Bischoff of DaimlerChrysler. Lagardère and the French government have a 22.5 per cent stake in EADS, matching that of DaimlerChrysler.

The French finance minister Thierry Breton has been pressing for a simplified shareholder and management structure for EADS and had set a deadline of today for a resolution. However, a German government spokesman said yesterday that it saw "no need to change the structure of the company in terms of the balance between France and Germany".

Although 62 and therefore beyond the usual retirement age for EADS executives, M. Gallois is seen as a safe pair of hands who would be acceptable to the Germans and could help steady the company. He is credited with driving through an alliance with the German rail operator Deutsche Bahn involving the joint running of passenger and freight services.