Germany doesn't want Airbus getting too French

10th October 2006, Comments 0 comments

FRANKFURT, Oct 10, 2006 (AFP) - Germany is believed to be fighting hard to retain Airbus work at a factory in Hamburg, at the centre of controversy over delays to the superjumbo airliner, following a top management upheaval seen as strengthening French interests.

FRANKFURT, Oct 10, 2006 (AFP) - Germany is believed to be fighting hard to retain Airbus work at a factory in Hamburg, at the centre of controversy over delays to the superjumbo airliner, following a top management upheaval seen as strengthening French interests.

The German government, although saying nothing officially, is reported to be sounding out ways of maintaining the delicate balance of power within the European Aeronautics Defence and Space Company.

In particular, it is believed to be studying options should the current representative of Germany's interests, auto giant DaimlerChrysler, decides to sell any more of its shares.

EADS and Airbus say they will press on with an outline restructuring plan that has been in the air for 10 days, although they say several months will be needed to flesh out the details.

The political context surrounding the crisis is due to be on the agenda when German Chancellor Angela Merkel and French President Jacques Chirac meet on Thursday.

Both the Handelsblatt and the regional Berlin daily Tagesspiegel reported on Tuesday that Berlin had asked the state redevelopment bank, KfW, to draw up a "secret plan" to buy the shares that DaimlerChrysler was preparing to sell in order to cut its stake in EADS from 22.5 percent to 15 percent.

But the government, which had only recently rejected such suggestions, now appeared unwilling to be pinned down.

"It's a theoretical possibility, but there's nothing concrete yet," said Ulrich Wilhelm, spokesman for Merkel.

At the centre of German concerns is a possible shift in the power balance within EADS and the fate of Airbus' Hamburg factory.

This production unit has been blamed for the delays that are currently dogging the group's ambitious A380 superjumbo, triggering speculation that production there could be transferred to Toulouse in France.

France is represented within EADS via a 15-percent stake held by the state holding company Sogeade, and 15.0 percent via Lagardère, of which half is due to be sold. Germany's interests are represented by DaimlerChrysler with 22.5 percent, having sold this year a stake of 7.5 percent.

The German factories build parts of the fuselage for Airbus aircraft. EADS is buying 20.0 percent of itself from British group BAE Systems.

However, DaimlerChrysler already has enough on its plate in resolving the problems facing its US subsidiary Chrysler and its loss-making ultra-compact Smart car.

EADS has two main board chairmen, German Manfred Bischoff and Frenchman Arnaud Lagardere. It also has two French and a German co-chief executives, Louis Gallois, a Frenchman, and Thomas Enders, a German.

Late on Monday Frenchman Christian Streiff was replaced as chief executive of Airbus by Gallois, who also retains his functions at EADS. This was seen as strengthening the influence of France over Airbus.

"We must stop everything becoming French" at Airbus, German Defence Minister Franz Josef Jung told the weekly newsmagazine Der Spiegel earlier this week.

Many analysts say that the complicated management and production structure, and political interference are the main causes of the crisis at EADS.

Some analysts are suggesting that Streiff was forced out because his rescue plan did not take sufficient account of national interests.

"Streiff was the first person to make it clear that it shouldn't be about national egos and industrial political decisions, but about getting the company ship-shape, making production more efficient. As long as EADS remains a conglomeration of national-political interests and as long as state influence continues to increase, the share will remain a highly risky investment," said one analyst who declined to be named.

In its editorial comment on Tuesday, the business daily Handelsblatt said that in order to neutralise the situation, the German government should buy any shares that DaimlerChrysler decides to offload.

Copyright AFP

Subject: French news

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