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Daimler-Benz to Cut Jobs, Sell Plants in Restructuring : Aerospace: German aircraft maker says moves are part of plan to restore profitability.

October 24, 1995|From Reuters

MUNICH, Germany — Daimler-Benz Aerospace AG, Germany's largest aircraft maker and a key member of the Airbus group, said Monday that it will cut nearly 9,000 jobs, or 18% of its staff, and sell several factories to restore profit.

The moves were part of restructuring plan that aims to help the Daimler-Benz unit, known as Dasa, achieve its goal of "lasting profitability" by the end of 1998, even if the dollar is as low as 1.35 German marks.

A weak dollar, currently at 1.38 marks, has badly hurt Dasa's German profit since its main competitors are U.S. companies such as Boeing Co. and world sales are priced in dollars. A lower dollar cuts the prices of U.S. goods for America's trading partners.

"Assuming that the dollar exchange rate remains as low as 1.35 over a longer period of time, the measures taken up to now will no longer be sufficient to maintain our competitive position," Chairman Manfred Bischoff told a news conference.

"It is therefore indispensable that we concentrate our efforts on remaining competitive."

He said that despite the cuts, Dasa was still likely to post a loss next year but might be able to turn a profit by 1997.

Dasa suffered an operating loss of $1.15 billion in the first half of this year in large part because of the strength of the mark. Bischoff, however, denied speculation of a huge loss for the full year.

He said it would cost the company roughly $360 million to carry out the restructuring scheme, but that it would boost earnings by $504.2 million.

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