YOU ARE HERE: LAT HomeCollections

Dispute delays job cut plan for Airbus

An announcement on restructuring is postponed after France and Germany disagree on how best to share the work among countries.

February 20, 2007|From Reuters

PARIS — Airbus postponed a major announcement on job cuts planned for today, saying European nations could not agree on how to share the work on the plane maker's next aircraft, the wide-body A350.

The surprise statement Monday followed a stormy board meeting the evening before at parent European Aeronautic Defense & Space Co. There, the group failed to sign off on management's so-called Power8 restructuring plan, seen as crucial to the future of Airbus, a source close to the matter said.

The development exposed continued tensions between the four countries where Airbus plants are based -- Britain, France, Germany and Spain -- as Airbus Chief Executive Louis Gallois prepares to cut as many as 10,000 jobs, or a fifth of its workforce.

The unease is felt most deeply in France and Germany, which between them employ 40,000 Airbus workers in 11 factories.

The cost-cutting plans were triggered by delays in the company's A380 super-jumbo jet, which drove Airbus to a loss last year and bled cash from parent company European Aeronautic.

Trouble in wiring the A380 delayed the plane's debut and stripped almost 5 billion euros ($6.6 billion) from Airbus' expected earnings in coming years.

Analysts said the restructuring would shape the company's future as it chooses a site for assembly of the mid-size A350 XWB, which stands for extra-wide body.

But negotiators appeared to have hit an impasse over the principles for distributing pain and gains in the restructuring.

France says it wants the cuts shared on the basis of "fairness," while Germany insists on "equality," which implies a one-for-one share of job cuts in each country, the source close to the matter said.

The political stakes are high in both countries, with France facing presidential elections in late April and Germany keen to avoid a reversal of the downturn in unemployment that has supported economic growth over the last year.

In a rare act of public brinkmanship, Gallois challenged governments to end recent squabbling and postponed the union and news briefings on the restructuring program.

"I made proposals which I deem balanced, both from an industrial and a technological point of view, and which serve our objective of economic competitiveness," he said.

"I wish that they can lead to the consensus we urgently need. Airbus cannot delay any longer implementing Power8. Quite naturally, employees are eager to know how the future of their company, together with their own future, is being shaped," Gallois added.

In the same written statement, Gallois said talk would resume in the coming days on the workload for building the A350.

The timing leaves room for a high-level political settlement between France and Germany. French President Jacques Chirac is due to meet German Chancellor Angela Merkel on Friday, and they are very likely to discuss Airbus, an aide to Chirac said.

The German government declined to comment.

Los Angeles Times Articles