Airbus Overhaul Approved
February 27, 2007
European planemaker Airbus has agreed a stalled restructuring plan, putting an end to months of uncertainty and paving the way for major job cuts.
The EADs board of directors unanimously approved the rescue package on Monday night, but details are not set to be revealed to the 55,000-strong workforce until Wednesday.
Unions representing Airbus workers are threatening to organize Europe-wide strikes if the measures are too swingeing.
Threat of action
"No one wants this to happen. But we are not ruling it out," said Peter Scherrer, General Secretary of the European Metalworkers' Federation. He said the closing down of entire plants, the one-sided distribution of cuts or the playing-off of different workforces could, for example, trigger industrial action.
The broad outlines of the plan were first unveiled in October, sparking union protests. In February, 20,000 members of the German metalworkers' union IG Metall took part in a day of action.
Airbus has 16 factories in Britain, France, Germany and Spain, but the main tensions have arisen over job cuts in Germany and France.
With presidential elections coming up in France, French politicians are particularly sensitive about domestic job cuts. This sparked fears in Germany that German workers would bear the brunt of the cutbacks.
French Prime Minister Dominique de Villepin referred last week to 10,000 job cuts -- a figure later denied by the German government.
A French newspaper also carried an unconfirmed report last week that Airbus would seek to close four factories in France and four in Germany.
Government concern
The restructuring plan was high on the agenda at a meeting of French president Jacques Chirac and German Chancellor Angela Merkel on Friday, who were keen to defuse tensions sparked by the speculation.
The two leaders agreed there should be an "equitable distribution" of the measures needed to reorganise the company.
Costly delays
The Franco-German company, whose headquarters are located in the French city of Toulouse, has been hit by a string of production problems with the company's A380 superjumbo airliner which have led to costly two-year delivery delays.
EADs said the so-called Power8 rescue plan would 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."
In January, it was announced that Airbus would report an operating loss for 2006 because of unexpected costs linked to the superjumbo programme.
Power8 is intended to save the company five billion euros by 2010 and two billion euros each year thereafter.
Airbus is also counting on savings from Power8 to help fund the development of the new mid-sized long-haul jet, the A350 XWB.
Rivalry with Boeing
This ten billion euro project is seen as crucial for helping the European planemaker compete with Boeing.
The failure of the EADs board to agree on the sharing of work on this project has delayed the announcement of the overhaul package.
Analysts have long said that the aircraft maker should spin off the less important production sites.