Airbus COO Sees Strong Euro Hurting Recovery
Airbus's chief operating officer said the rise in the euro to above $1.4 meant the European plane maker might have to find another billion euros in savings under a restructuring plan drawn up with the euro at $1.35.
"If the euro remained durably at $1.45, that would mean we had to find one billion euros in additional savings under Power 8," Fabrice Bregier told BFM radio on Friday.
Bregier joins a chorus of French industrialists, such as the chief executive of PSA Peugeot Citroen, who are concerned the euro's rise to record highs is hurting exports and could lead to job cuts in European manufacturing.
Critics say France is late in making structural adjustments to become more competitive.
Power 8 is a restructuring plan put in place by Airbus after the European group was hit by costly delays in its A380 super jumbo plane programme last year. It needed to slash costs to remain competitive against arch rival Boeing .
When the euro was at $1.35, this was already a 35% rise since levels of $0.88 in the year 2000.
The Power 8 plan will see the sale or closure of several sites in the four countries where Airbus is based as well as more than 10,000 job cuts at its own operations and suppliers.
Bregier added that Airbus, which currently buys 50% of its supplies in the dollar zone, would have to increase that proportion for new programmes such as the A350 plane.
And if the euro remained high this would "not allow us to invest in new projects," Bregier said.
On Wednesday, U.S. manufacturer Honeywell International signed a contract worth potentially $16 billion for the supply of auxiliary power systems, pressurisation and climate-control systems for the A350.
Wants ECB to Act
Bregier said he hoped the European Central Bank would put in place a policy that would allow the euro to retreat and noted French President Nicolas Sarkozy was already speaking up for exporting companies such as Airbus.
"What we want is that the euro does not become even stronger and that eventually the European central banks take decisions in order to make the euro more attractive for exports from Europe," Bregier said.
"Our reply to a strong euro is, first to be more competitive, second to buy more in the dollar zone. The first to be hurt are the European suppliers. Finally, we can delocalise some production. We are not in that situation yet. We don't have our backs against the wall because we have foreign exchange cover for several years," Bregier said.
But if the euro remained above $1.40, the company would have to make adjustments, he added. "At the moment we buy about half in dollars half in euros. That is not sufficient. On the new A350 we can say that proportion will be higher than 50%," Bregier said. Airbus is a 100 percent-owned unit of EADS.
French President Sarkozy said on Thursday the president of the European Central Bank, Jean-Claude Trichet, should take note of the U.S. Federal Reserve's recent decision to cut its interest rates.
"I tell Mr Trichet ... look at what the others are doing; what the others do is not necessarily a nightmare," Sarkozy said in a television interview.