AP News, December 19th, 2007
Airbus parent EADS tapped three European companies Wednesday to buy all or part of six factories being shed in a major overhaul aimed at boosting the planemaker's fortunes.
The surprise decision to keep the sites in European hands was a blow to U.S. bidder Spirit AeroSystems Inc., which had been reported to be the favorite for all six sites.
Some of the plants will make parts for the mid-range A350 XWB, which Airbus is hoping will rival Boeing Co.'s popular 787 Dreamliner.
Airbus insisted the decision had nothing to do with politics, including union opposition in France and Germany to the restructuring plan.
"The three partners had better offers commercially and technically, were more aggressive than Spirit in the last round of negotiations," Airbus spokesman Stefan Schaffrath said. "Politics had no influence."
He said EADS CEO Louis Gallois and Airbus CEO Thomas Enders agreed on the selections with the EADS board, which met in Amsterdam on Wednesday and chose bids by France's Latecoere SA, Germany's MT Aerospace AG and Britain's GKN PLC.
EADS said in a statement it hoped to make "substantial progress" on the deals in the first quarter of 2008. Five of the plants being sold are Airbus sites; one, in Augsburg, Germany, is part of EADS Defence & Security, a subsidiary that makes the Eurofighter jet and military communications systems. Airbus currently has 16 plants.
The chief French union at Airbus, Force Ouvriere, protested the decision, saying in a statement that it "remains opposed to the sale of the sites and considers that the solution presents a risk to the future of the European aeronautic industry."
The head of the employee council in Augsburg, Peter Schoenfelder, said that the work force "remains unsettled." "This is not a contribution to greater Christmas peace."
The Airbus plants in question employ 7,400 people and represented 1.4 billion euros ($2 billion) of the company's costs in 2007, the statement said. Airbus would not say what its overall cost base was or what portion of the company's revenues the plants represent.
EADS — or European Aeronautic Defence & Space Co. NV — and subsidiary Airbus are in talks on a full selloff of Britain's Filton plant, which makes wings and sub-assemblies, to engineering and automotive parts group GKN.
EADS is in talks on forming joint ventures for the other five sites: Meault and Saint-Nazaire in France, and Nordenham, Varel and Augsburg in Germany.
EADS said the joint structure would help Airbus monitor the transition during the development of the A350 XWB. Airbus will have the option to withdraw completely from the joint ventures after three years.
The international bidding process was announced in February as part of a broad companywide restructuring and cost-cutting program called Power 8. German news reports this week said Spirit AeroSystems, which makes parts for planes like wing and propulsion systems and engine parts, was likely to win the bidding for all six plants.
"We put key resources into due diligence for the Airbus U.K. and German sites. In the end, we just couldn't close a business case that met both our customer requirements and our shareholder requirements," Spirit Chief Executive Jeff Turner said in a statement. Spirit AeroSystems is based in Wichita, Kan.
The Airbus restructuring plan includes the sales of all or part of these six plants, along with job cuts and the closures of other factories. It is aimed at shoring up Airbus' finances after cost overruns and delays on its superjumbo A380 and the A350.
With about two-thirds of its costs denominated in euros and aircraft sold in dollars, Airbus has been savaged by the plunging U.S. currency, unlike its Chicago-based rival Boeing. Gallois has said that Airbus also needs to shift parts of its production to countries outside the euro-zone to remain competitive.
Analysts cautiously welcomed Wednesday's decision. "It's a first step toward ... a restructuring that will allow shareholders to rediscover growth," said Francois Chaulet of Montsegur Finance. "The decision to stay with Europeans makes (the restructuring) less dramatic."
EADS shares fell 1.3 percent to 22.14 euros ($32.86) on Wednesday in Paris.
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Associated Press writers Angela Charlton in Paris and David Twiddy in Kansas City contributed to this report.
