By Tim Hepher and Jens Hack
PARIS/MUNICH (Reuters) - AIRBUS (EAD.PA)Group
Chief Executive Tom Enders acted two days after apologizing in Britain over the delays and promising to apply internal "consequences," in an effort to stabilize a program facing possible new financial charges.
As part of the shake-up, the head of Military Aircraft activities, Domingo Urena-Raso, stepped down from his post and will be replaced by fellow Spaniard Fernando Alonso, the company said.
But production of the aircraft, which has faced quality problems and difficulties in the integration of advanced military features, will be transferred under the control of the defense division's Operations unit.
In a letter to staff, the overall head of defense and space activities at Europe's largest aerospace group said the A400M was in a "critical situation" and announced the creation of a new monitoring board under his command.
"We apologize to our customers for the delayed deliveries and performance shortfalls. They will be rigorously addressed and we will do our utmost to overcome them," Bernhard Gerwert said, according to the letter seen by Reuters.
Shares in Airbus Group fell 2.3 percent.
The new man in charge of Military Aircraft, Alonso, 58, has been running Airbus flight test operations and has worked closely on the A400M, the company said.
His predecessor Urena-Raso led negotiations that resulted in a 3.5-billion-euro bailout for the A400M project in 2010 from seven NATO nations: Britain, Belgium, France, Germany, Luxembourg, Spain and Turkey.
The bailout effectively rescued the project which had run into difficulty over engine problems, but failed to overcome problems of coordination and integration, people familiar with the 20-billion-euro project have said.
While struggling to overcome internal problems, Airbus has also been increasingly at odds with the German government which has been vocal about the latest delays.
Airbus insiders say Germany's insistence on unusually advanced features for a transport carrier, including ground-hugging navigational software closer to missile technology, were partly driven by a desire to protect domestic high-skilled jobs and hindered the project.
Germany has long argued Airbus Group should meet its promises.
Urena-Raso "is a good manager but he was caught between the complexities of the German specifications, Spanish concerns over control, and Airbus in Toulouse who are fundamental to the whole project," a person familiar with the program said.
Urena-Raso is likely to stay in Europe's largest aerospace company but the move is a setback for one of its most respected and charismatic executives, who was once seen as a candidate to run the Airbus & Space Division, now headed by Gerwert.
(Editing by Leila Abboud)
