Airbus gets green light for rescue plan

27th February 2007, Comments 0 comments

PARIS, Feb 26, 2007 (AFP) - European plane maker Airbus finally won approval to press ahead with a rescue plan on Monday, clearing the way for major job cuts and signalling an end to Franco-German tensions over the restructuring of the company.

PARIS, Feb 26, 2007 (AFP) - European plane maker Airbus finally won approval to press ahead with a rescue plan on Monday, clearing the way for major job cuts and signalling an end to Franco-German tensions over the restructuring of the company.

"The EADS board of directors today unanimously approved the Power8 plan for the transformation of Airbus," said a statement from Airbus parent company EADS, which owns 100 percent of the group.

The broad outlines of the "Power8" restructuring plan were first unveiled by Airbus in October, but the detailed planning of the initiative had caused strains between France and Germany over where job cuts would fall.

EADS said that the plan would be unveiled to representatives of Airbus's 55,000-strong workforce on Wednesday and the company would then give details to the public.

"Power8 shall enable Airbus to better face the challenge of the US dollar weakness, the financial burden related to the A380 delays as well as its future investment needs," EADS added.

While Airbus has stressed the commercial imperative of implementing Power8, the spectre of job cuts and the closure of factories has highlighted nationalist strains at the heart of the Franco-German company.

French politicians are particularly sensitive about job cuts ahead of presidential elections in April and May, a fact which has raised fears in Germany that German workers would bear the brunt of the cutbacks.

In the latest of a number of speculative press reports, German magazine Focus reported on Monday that Airbus would dispose either entirely or partially of two factories in both France and Germany.

French Les Echos reported last Friday that Airbus would seek to close four factories in France and another four in Germany, while French Prime Minister Dominique de Villepin referred last Tuesday to 10,000 job cuts -- a figure later denied by the German government.

Implementation of the plan is likely to face fierce resistance from trade unions, which have organised protests since the plan was first unveiled four months ago.

"With this decision, its the end of the tunnel but also the beginning of the problems," said Jean-Francois Knepper, a representative of the powerful, hard-left Force Ouvriere trade union on Monday.

Airbus had delayed unveiling its rescue plan last week because of the failure of the EADS board to agree on the sharing of work for Airbus's new mid-sized long-haul jet, the A350 XWB.

Airbus chief Louis Gallois had stressed at the time that consensus was "urgently" needed to implement the restructuring plan.

The EADS board is dominated by the French shareholders in the group, media group Lagardere and the French state, and the major German shareholder, car maker DaimlerChrysler.

The Airbus restructuring plan was high on the agenda at a meeting of French President Jacques Chirac and German Chancellor Angela Merkel on Friday, who urged a "fair division" of the burden.

Airbus relies on factories in Britain, France, Germany and Spain, but the main tensions have arisen over the distribution of job cuts between French and German plants.

Les Echos reported on Friday that a factory in Britain and another in Spain could also leave the Airbus group.

Power8 is intended to save the company 5.0 billion euros (6.6 billion dollars) by 2010 and 2.0 billion euros per year thereafter.

The finances of the Toulouse, France-based group have been severely strained by a string of production problems with its A380 superjumbo airliner which have led to two-year delays to deliveries.

EADS said in January that Airbus would report an operating loss for 2006 because of higher-than-expected costs related to the A380 programme.

As well as government help, Airbus is also counting on cost savings from Power8 to help finance the development of the A350 XWB, a 10-billion-euro project which is seen as a vital response to the current popularity of Boeing planes.

Copyright AFP

Subject: French news

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