US embassy cable - 05PARIS1142

C O N F I D E N T I A L SECTION 01 OF 02 PARIS 001142 
 
SIPDIS 
 
STATE FOR EUR/WE, EUR/ERA, EB/TPP 
STATE PASS TO USTR (VERONEAU, NOVELLI, SANFORD) 
COMMERCE FOR GRANT ALDONAS AND FRED ELLIOTT 
 
E.O. 12958: DECL: 02/22/2015 
TAGS: ETRD, EAIR, SCUL, FR, WTRO, USTR 
SUBJECT: ARNAUD LAGARDERE ON BOEING/AIRBUS, CHIRAC AND THE 
MEDIA 
 
REF: A. 04 PARIS 9014 B. PARIS 372 
 
Classified By: Econ Minister-Counselor Thomas J. White for reasons 
1.5 (b) and (d). 
 
1.  (C) SUMMARY: Ambassador hosted Lagardere group CEO (and 
EADS shareholder) Arnaud Lagardere at lunch February 18. 
Discussion focused on Lagardere/EADS business plans, 
Boeing/Airbus, President Chirac and media industry 
developments.  Lagardere had unvarnished criticism for 
President Chirac.  On Airbus, he said that the A350 was a 
priority, would be a completely new aircraft (like Boeing,s 
787), and would require European launch aid.  Nonetheless, he 
understands the importance of finding a workable solution to 
the Boeing/Airbus dispute.  END SUMMARY. 
 
2. (U) The Ambassador hosted Arnaud Lagardere, CEO of the 
Lagardere Group, for lunch on February 18.  DCM, ECON and FCS 
Minister-Counselors also participated.  The Lagardere Group 
has extensive media holdings in France and around the world, 
and owns 15 percent of the European Aeronautic Defense and 
Space Company (EADS).  EADS in turn owns 80 percent of 
Airbus.  Lagardere inherited his role from his father, Jean 
Luc Lagardere, founder of the group and a driving force 
behind the creation of EADS and Airbus. 
 
------------------- 
LAGARDERE ON CHIRAC 
------------------- 
 
3. (C) Lagardere had rather scathing criticism for French 
President Chirac.  Sporting a &Paris 20128 lapel pin 
promoting the city,s Summer 2012 Olympic bid, Lagardere said 
that Paris is well-placed to win the contest, but differences 
between Chirac and Paris, Socialist Mayor have recently 
surfaced.  Lagardere opined that Chirac messes up everything 
he gets involved in.  Similarly, Lagardere termed 
&ridiculous8 Chirac,s desire to see the launch of a French 
language CNN-style news operation.  He lamented that a lot of 
money will be thrown at this project.  &It will be done, but 
we will pay.8 
 
4. (C) Regarding the 2007 Presidential elections, Lagardere 
) who claims a good relationship with UMP President Nicolas 
Sarkozy ) says there is a 100% chance that Sarkozy will run. 
 Lagardere believes Chirac is also quite likely to run, which 
in his view could open up space for Socialist leader Francois 
Hollande. 
 
------------------------------------- 
LAGARDERE,S COMMITMENT TO EADS/AIRBUS 
------------------------------------- 
 
5.  (SBU) There has been frequent speculation that the 
Lagardere group, primarily a media conglomerate, may want to 
shed its stake in EADS in the next few years.  Asked about 
the prospect, Lagardere said that he has a 5-8 year horizon 
(&not three years8) for doing so.  (Comment.  His 
subsequent comments suggest this timeline may be designed to 
see the A350 project come to fruition.  End Comment.)  A 
Chirac victory in 2007 would hasten his exit, he said, while 
a Sarkozy victory would probably mean the later timeline. 
 
6.  (C) Lagardere characterized as a &mistake8 the decision 
to remove Philippe Camus as French co-head of EADS and to 
replace him with current Airbus President Noel Forgeard. 
(Comment.  Forgeard is a Chirac protege, and Chirac forced 
the change.  The Lagardere and GOF ownership in EADS is held 
in a holding company, each owning half of the 30% stake.  The 
Camus-Forgeard rivalry is spelled out in ref A.  Camus, on 
the other hand, has been a long-time Lagardere lieutenant, 
and will return to the Lagardere media operation when he 
leaves Airbus this summer.  End Comment.)  Lagardere said 
that Camus would take some time this summer to pursue his 
U.S. permanent resident status, and assume management of the 
Lagardere U.S. interests.  Camus, like Lagardere, owns a home 
in the U.S., and both plan U.S. university training for their 
children.  Lagardere joked that he had given Camus &the 
virus8 (i.e., a love of the U.S.). 
 
7. (C) There will be tensions within EADS given the styles of 
new co-chairs Forgeard and Thomas Enders, according to 
Lagardere.  He listed three names on the short list for the 
new President of Airbus: Eurocopter CEO Fabrice Bregier, 
Airbus Executive VP for Operations Gerard Blanc (not well 
liked by the Germans, according to Lagardere) and Airbus 
Chief Operating Officer Gustav Humbert.  Humbert, a German 
national, is the dark horse for what will most likely be a 
French position at the head of Airbus.  Historically, within 
Airbus, a French manager always reported to a German 
supervisor and vice versa. 
 
8. (C) Lagardere says that Germany was not happy with the 
Forgeard/Camus episode and with GOF interest in pushing a 
single (French) CEO for EADS.  German Chancellor Schroeder,s 
call for a possible Russian stake in EADS during the A380 
unveiling in Toulouse last month (ref B) was his way of 
expressing his displeasure with the French.  Lagardere says 
his relations with fellow EADS shareholder and 
Daimler-Chrysler Chairman Juergen Schremp are quite good, and 
Lagardere is considering joining the Daimler-Chrysler board 
at Schremp,s invitation. 
 
 
----------------------- 
AIRBUS READIES THE A350 
----------------------- 
 
9. (SBU) The planned Airbus A350, which will compete with 
Boeing,s 787, will be a completely new aircraft.  Airbus has 
decided not to build it on an A330/340 base, as initially 
envisioned.  Lagardere said that Airbus is committed to the 
project, and cannot allow the 787 to monopolize this market 
segment.  Airbus will need launch aid to produce the 
aircraft, which will not be ready before 2010.  He lamented 
that 60 percent of Airbus, costs are Euro-denominated, while 
100 percent of Airbus sales are in dollars.  Lagardere 
indicated that an initial launch customer could be announced 
in about two months, hinting that it would not be Dubai, but 
might be Qatar. 
 
10. (SBU) Lagardere believes that Boeing will only achieve 
70-80 percent of its planned sales of the 787, still an 
impressive achievement in his view.  On the other hand, he 
believes Airbus can sell up to 1000 models of its superjumbo 
A380.  He foresees a turndown in the world aircraft market 
looking out to 2008-09.  He noted that the Mideast market is 
currently booming (the A380 has done well there), but 
airlines there are probably overbuying. 
 
11. (C) Lagardere says he has not yet met Boeing CEO Harry 
Stonecipher.  The Ambassador encouraged him to do so, 
pointing out that Stonecipher knew Arnaud,s father, Jean Luc 
Lagardere, and had commented to the Ambassador late last year 
that he (Stonecipher) and Jean Luc could have resolved the 
Boeing/Airbus dispute. 
 
---------------- 
FRANCE AND CHINA 
---------------- 
 
12. (C) In an interesting aside, Lagardere called French 
President Chirac,s December 2004 visit to China a 
&disaster8 for French business.  Airbus, Alstom and Alcatel 
all came away relatively empty-handed, despite earlier 
Chinese hints of major announcements during the visit. 
Lagardere noted that the French press was quick to question 
whether Chirac had &lost his touch.8 
 
------------------------- 
LAGARDERE MEDIA EXPANSION 
------------------------- 
 
13. (SBU)  Eighty percent of the Lagardere Group,s revenue 
comes from its media business.  The group has diversified 
holdings around the world (e.g., 245 magazine titles in 36 
countries).  Lagardere is considering some additional 
acquisitions in the U.S. market and is in discussion with 
Henry Kravis, Primedia Inc. for some magazine titles and 
with Rupert Murdoch,s media conglomerate. 
Leach