EADS coy on financing for new Airbus A350

4th December 2006, Comments 0 comments

PARIS, Dec 4, 2006 (AFP) - European aircraft manufacturer Airbus and its parent group EADS need new finance for their latest programme to build the A350 airliner, but on Monday they played down any sense of urgency.

PARIS, Dec 4, 2006 (AFP) - European aircraft manufacturer Airbus and its parent group EADS need new finance for their latest programme to build the A350 airliner, but on Monday they played down any sense of urgency.

The French government assured that four European governments would help finance the programme, expected to cost EUR 10 billion and deemed vital if Airbus is to maintain its full challenge to US manufacturer Boeing.

But Airbus told a press conference that although it was in talks with the governments, no decision on state funding was imminent, adding that the company had no immediate need for finance.

Airbus chief executive Louis Gallois, who is also co-chief executive of parent company EADS, said that "no decision has been taken or is imminent" concerning a contribution by partner countries to the programme.

Gallois said: "We do not have an imminent need for finance."

He also said: "The board of EADS has asked us to study all possible instruments for financing ... A capital increase is one of them, but only one possibility."

And, he remarked, "we are talking to governments to ensure a fair playing field for Airbus" in its competition with US rival Boeing.

"Subsidies for research and technology could play a key role," Gallois said, adding that "other possibilities" were being explored as well.

EADS had told Airbus to investigate all sources of raising money, and the plane manufacturer was also talking to subcontractors about risk sharing.

The European Aeronautic Defence and Space Company (EADS) decided late Friday to proceed with development of the A350 XWB long-range, wide-body airliner despite severe strains in the group caused by delays of up to 24 months in production of the A380 superjumbo jet.

A short time earlier French Economy and Finance Minister Thierry Breton had said that the four partner countries which back Airbus, France, Germany, Spain and Britain, would accompany financing of the A350 programme.

Breton told La Tribune newspaper that the French state, which owns 15 percent of EADS, "will accompany the financing" of the new aircraft.

Breton added: "The four governments concerned declared that they would provide guarantees at their level under similar conditions."

Asked about a possible recapitalisation of the company, Breton said that "the company's need for funding lies in about 2009-2010".

Airbus has announced ambitious plans to save money, in part to release funds for the A350 project, but has yet to provide full details of how it will restructure.

Breton said that half of the financing of the new programme would be provided from cost savings and half by means of a call for funds from interested parties, or from shareholders.

The head of strategy at Airbus, Olivier Andries, also said the company was in talks with 10 subcontractors which could play a role in containing development costs of the A350 airliner by means of risk-sharing partnerships.

Airbus had already decided to allocate five percent of the programme to China, five percent to South Korea and at least three percent to Russia, he noted.

Gallois repeated at the press conference that the company would allocate 50 percent of A350 airframe construction to subcontractors to save EUR 1.8 billion on development costs.

Airbus marketing director John Leahy said however that some airlines might cancel orders for the A350 because it would enter service a year late in 2013.

Airbus had taken 102 orders for the airliner and Leahy expected most of these to be maintained.

But In Madrid, Spanish airline Iberia, which has bought Airbus aircraft for 10 years, told AFP it had not yet considered whether to order the A350 to replace its A340 aircraft, commenting that the A350 was not yet ready but that a purchase of the Boeing 787 would end standardisation of the Iberia fleet.

EADS also said on Friday that its programme to build the A400M military transport aircraft faced "significant" challenges but that it had launched an "action programme" to uphold the delivery timetable.

Copyright AFP

Subject: French news

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