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Airbus' Job Cuts Raise Concerns

October 13, 2006|From the Associated Press

PARIS — France and Germany urged Airbus on Thursday to keep job losses to a minimum as it restructures, and German Chancellor Angela Merkel indicated that her government was mulling over the acquisition of a stake in the troubled jet maker's parent company.

The comments by French President Jacques Chirac and Merkel after a summit in Paris underline the pressure on new Airbus Chief Executive Louis Gallois as he prepares to unveil a major turnaround plan for the company.

Gallois has warned of "painful" job cuts at Airbus as he pushes ahead with cost-cutting targets identified by Christian Streiff, his predecessor. Streiff quit Monday after just three months on the job, citing resistance to change in the boardroom of Airbus parent European Aeronautic Defense & Space Co.

France and Germany "will together ensure that all the company's employees benefit from the greatest possible job security on all the sites concerned," Merkel said in a news conference with Chirac. "We cannot intervene in the economic sphere, but we can give our political support."

Chirac said the burden of any Airbus cuts should be "harmoniously shared" between Germany and France.

Besides an average two-year delay in deliveries of Airbus' flagship A380 super-jumbo jet -- which will wipe out 4.8 billion euros ($6 billion) of its parent's profit in the next four years -- the company faces a further squeeze from the weaker U.S. dollar, which hits revenue in euros because planes are sold in dollars. Analysts say outsourcing more work to lower-wage economies would help address that problem.

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