New Airbus chief to stick with old chief's rescue plan

10th October 2006, Comments 0 comments

PARIS, Oct 10, 2006 (AFP) - New Airbus chief Louis Gallois cleared his predecessor's rescue plan for take-off on Tuesday but warned that months would be needed to streamline "baroque" practices behind the crisis.

PARIS, Oct 10, 2006 (AFP) - New Airbus chief Louis Gallois cleared his predecessor's rescue plan for take-off on Tuesday but warned that months would be needed to streamline "baroque" practices behind the crisis.

Gallois was to meet Airbus managers two days before a Franco-German summit at which President Jacques Chirac and Chancellor Angela Merkel are expected to confront problems at Airbus, which some say has fallen victim to political pressure.

Meanwhile Christian Streiff, replaced by Gallois late Monday after just 100 days into his rescue mission, told the French newspaper Le Figaro that Airbus was still a European patchwork that "must become a real European enterprise".

The European Aeronautics Defence and Space Company (EADS) said that co-chief executive Gallois would assume the same post at Airbus and tighten control over the aircraft unit.

Speaking Tuesday to Europe 1 radio, Gallois said that a rescue plan called "Power8" would be implemented quickly, but that detailed preparations would require "several months of work".

Gallois acknowledged that the management of EADS, which has dual chairmen and chief executives representing France and Germany, and production at Airbus was somewhat "baroque" and "a little complicated".

"Some structures are too heavy and we must make them lighter," he said.

Job cuts and production site reviews were among the top priorities, Gallois noted, adding: "The effort must be balanced between different countries, we must not ask all from one country and nothing from another."

The price of shares in EADS, which have been rocked by the industrial crisis and corporate turmoil, showed a gain of 4.51 percent to EUR 21.07 in afternoon trading in Paris.

Financial aspects of the restructuring plan were presented by EADS eight days ago. But the group then told employees that up to three more months would be needed to work out details.

Morgan Stanley analyst Eric Chaney commented in a research note that the plan, on which the future of the company depended, "has a name...but it does not have much substance".

The crisis was largely the result of "excessive political interference" he told AFP Tuesday.

Although governments might now have a short-term role to play, "to secure the long-term sustainability of this company, governments will progressively have to move out".

Otherwise, "the very future of the company could be jeopardised", his note warned.

The crisis posed a broader threat to European economies in that the aerospace sector helped drive "innovation and productivity for the economy" overall.

Airbus, in difficulties for 18 months, said last week that its flagship A380 superjumbo program would be delayed by up to two years, mainly owing to electrical cabling problems.

EADS warned it faced a 6.3-billion-euro cash shortfall as a result.

Airbus makes planes at two sites in Germany and France under an industrial model that protects jobs but adds to costs and complexity.

Spanish and British aerospace companies also contribute to EADS and Airbus, but BAE Systems is about to sell its 20-percent stake in Airbus to the parent group.

In Germany, the business daily Handelsblatt suggested Tuesday that the state take a direct stake in EADS, "as absurd as that may sound," to "help neutralize the current fraught political situation".

Chaney told AFP such a step "might be useful in the short term to solve the crisis but that's obviously not the long-term solution".

The French state currently owns around 15 percent of EADS.

Copyright AFP

Subject: French news

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