EADS Board Backs Airbus Turnaround Plan
The board of Airbus parent EADS approved a restructuring plan for the troubled European aircraft maker Monday, breaking a weeklong deadlock over job cuts and future jet programs between France and Germany.
The European Aeronautic Defence and Space, which voted unanimously on the plan, said details would be released Wednesday after they are passed through company ranks, officials said in a statement.
The restructuring plan will allow the civil airliner division of Airbus to "face the challenge of the U.S. dollar weakness" as costs continue to rise from delays to its flagship double-decker A380 plane, the Franco-German defense company said.
The weak dollar the currency in which the planes are priced has pummeled Airbus, which is expected to shift even more supplier costs and contract work to dollar-linked economies.
Airbus must also fund development of the A350, its 11.6 billion euros ($15.3 billion) answer to the runaway success of U.S. rival Boeing's 787 in the lucrative market for long-range, midsized planes.
A two-year delay in rolling out the 555-seater A380 has wiped about 5 billion euros ($6.6 billion) off profit forecasts for 2006-2010. Airbus officials believe the new strategy can recapture the same amount in savings during that period and generate 2.1 billion euros ($2.8 billion) in annual cost reductions in later years.
Those targets were unchanged, the company statement said, despite a final bout of haggling that forced Airbus Chief Executive Louis Gallois to cancel his scheduled Feb. 20 announcement of the plan, dubbed "Power8," to make some changes. That was two days after a board meeting at which DaimlerChrysler AG, the main German shareholder, refused to give its backing.
Three days ago following talks near Berlin, French President Jacques Chirac and German Chancellor Angela Merkel said the burden of Airbus cuts and the development of future plane technologies should be shared by both countries.
Germany's economics minister, Michael Glos, said earlier this month that EADS could lose defense contracts if Airbus cut too many German jobs.
DaimlerChrysler's 22.5% share of the voting rights in EADS is matched by the combined stake held by the French government and Paris-based Lagardere SCA. Unlike the French state which owns 15% of EADS Berlin has no direct stake in the company, but leans heavily on decision makers because it is its largest single defense customer.
French Prime Minister Dominique de Villepin said Tuesday that Airbus was seeking to cut about 10,000 jobs, almost 18% of the work force, as widely reported in the French and German financial press.
EADS refused to comment on any job cuts until after labor unions are informed on Wednesday.