EADS Directors Could Announce New A380 Delays

Posted 03 October 2006 @ 06:03 am EET     Print     Reprint     E-Mail     Comments

PARIS (AP) - Airbus and its parent company EADS could disclose new delivery delays for the A380 superjumbo jet as well as a restructuring plan for the aircraft manufacturer, following a meeting of EADS directors.

A source close to the matter said Monday that directors of the European Aeronautic Defence and Space company would confer on Tuesday, perhaps in a video conference, following up on an inconclusive session Friday in Amsterdam.

The source said the board was expected to discuss additional delays in the A380 program and their financial impact, along with a proposed restructuring plan for Airbus. The EADS board, after hearing from Airbus chief executive Christian Streiff on Friday, said only that it would continue discussions "in the near future."

Streiff failed to win the board's backing for his proposals to revamp operations at Airbus, according to several sources, who said there might have been disagreement among French and German shareholders in EADS.

French Economy Minister Thierry Breton later expressed "confidence in the quality of men who are now at the head of Airbus and EADS".

Breton added that the decisions they made would be "good for the trio of clients, staff and shareholders".

EADS is controlled by German-US auto giant DaimlerChryler, the French state, and the French media and defense group Lagardere.

The source told AFP that the new delivery schedule for the A380 would be "at the centre of discussions" on Tuesday with delays, according to various press reports and company sources, expected to be between six and 12 months.

Streiff is scheduled to explain his restructuring plans before a meeting of 400 senior Airbus managers on Wednesday and a works council meeting has been organised for the same day, the source said.

These presentations will only be possible however if the EADS board approves the strategy on Tuesday, the source underlined.

Among a number of measures, the plan is expected to propose a deep re-organisation of Airbus' manufacturing processes, many of which were fixed for political purposes when the group was formed out of French, German, British and Spanish assets.

Assembly takes place across 16 sites in Europe, mainly in France and Germany, and is broadly divided between the two countries to ensure a share of the work for each state.

Airbus is also expected to be more closely integrated into EADS under the re-organisation plan, giving the parent company more control over management at the company.

EADS is set to buy the 20 percent it does not already own of Airbus from BAE Systems of Britain, which should make this process easier, analysts say.

Airbus has been plagued with production problems that have prompted delays in the delivery of the A380, the world's largest civilian airliner and a key component for Airbus as it tries to catch up with rival Boeing of the United States.

Deliveries are already more than a year behind schedule and Airbus last month acknowledged that additional delays were possible.

Industry sources have said EADS and Airbus are awaiting reactions from airlines to any new timetable for delivery of the A380. To date the delays have not prompted any cancellations in orders for the superjumbo, which is capable of carrying up to 840 passengers.

With reaction from clients, sources added, the companies will be able to estimate and communicate the financial impact of the delivery delays.

EADS shares fell by 1.23 percent to 22.40 euros in Paris trades on Monday.

France's CGT trade union said last week that the joint head of EADS, Louis Gallois, had met unions "to announce the project for a vast program of economies and reorganization at Airbus following a new delay due to be announced for deliveries of the A380."

It said the new delay was being used as an "alibi for a profound reorganization and to accelerate the strategy by EADS of externalizing internationally", i.e. moving activities abroad.

When Streiff was named Airbus chief executive on July 7, he set himself 100 days to produce a plan to overcome a crisis that began in mid-June when EADS shares fell 26 percent after it said A380 deliveries would be delayed by up to six months.

No official details have been released of the proposed Airbus restructuring, but union sources said it was likely to include major job cuts and other efficiency measures that could affect factories in Britain, France, Germany and Spain.