Airbus Head Sees Plant Sales, Dollar as Key
The newly appointed head of Airbus says politics will not throw pending plant sales off course but if dollar weakness worsens, its Power8 restructuring plan would need a drastic revamp.
"It would make little sense to have a cozy political solution, "Tom Enders said in an interview when asked if stakes in plants in France, Germany and the U.K. would have to be sold to companies from those countries.
"I am relaxed about that. What matters is how convincing the concepts are, "he said.
Enders's remarks were embargoed until Friday.
Airbus wants to sell three of its 16 plants and stakes in three more to lower its production costs. Progress in the sales is expected this month.
"We are looking for sustainable solutions in our own interest, "said Enders, who is co-chief executive of Airbus parent firm EADS and was tapped this week to move over to Airbus as CEO from Aug. 27.
The Power8 cost-cutting program is based on an exchange rate of $1.35 to the euro.
"If the dollar really moves in the direction of 1.50 and beyond, then we will have to consider other, very much more drastic measures," Enders said.
Airbus says each 10 cent move in the rate costs it an extra billion euros.
"With the best will in the world, I am unable to tell you where the tolerance threshold is. We will closely monitor the further developments in this regard," Enders said.
Airbus is making changes after posting an operating loss last year hurt by the weak dollar and the costly delay of its A380 superjumbo.
Plant sales and 10,000 job cuts are key components of the Power8 plan.
There had also been speculation that EADS might need to raise capital but Enders was sanguine about the need for such a move.
"I would not actually expect that after the shareholders were able to satisfy themselves that the firm is well capitalized," he said. "The situation has become considerably relaxed following the shareholders' statements. That definitely has something to do with the recent order intake at Airbus, too."
Airbus lagged rival Boeing in orders for the year at the end of May but had an extraordinary June highlighted by orders taken at the Paris air show.
Equal French and German core shareholders and executive power at EADS means the shake-up at Airbus also has to strike a balance in where the cuts are made.
To safeguard interests on the two sides, France and Germany have recently begun to examine the possibility of having golden shares in EADS.
"It is a discussion which could lead to governments realizing that they don't need direct holdings. States don't have to be represented in the shareholder structure to see their interests secured," Enders said.
EADS co-CEO Louis Gallois, who will become sole EADS CEO next month, told analysts on a conference call on Thursday that management changes would make it harder for politicians to interfere and help the firm "overcome nationalist positions".
Gallois said divisions including Airbus would be fully responsible for profit and loss and would be given the operational means necessary to meet their targets.
Enders, 48, is the fifth Airbus CEO in two years and takes over the civil airliner business despite a background mostly in defense.
"It is a big challenge. It is definitely something that will keep me completely busy for years. I have promised myself that I will last longer in the post than my three predecessors," he said.