Thu, Nov 30, 2006
EADS Still Struggles To Fund New Airliner
It's either one or the
other for EADS: find more money, or find a way to cut costs --
that's the only way the company will ever get Airbus' A350 XWB
program off the ground.
Last week two major board meetings were called off because of
disagreements between the major players. EADS still hasn't given
Airbus approval to start work on the new airliner. Experts place
start-costs for the program between ten and twelve billion
dollars.
At least one of the company's largest stake holders,
DaimlerChrysler, says its not going to pay. Its CEO Dieter Zetsche
says EADS will need to find another way to fund the program's
development.
DaimlerChrysler is actually looking at ways to reduce its stake
in Airbus parent EADS. It's been in talks with the German
government to ensure whatever plan it comes up with doesn't upset
the balance of power between France and Germany in the governance
of EADS.
He told Reuters, "Obviously, when on the one hand, we are just
diminishing our stake in a defined way, it is counter-intuitive at
the same time to discuss -- and even less decide on -- an equity
increase."
DaimlerChrysler has said it would like to cut its stake in EADS
to 15%, from 22.5%.
Airbus is looking at ways to cut costs, including outsourcing.
Company President and CEO Louis Gollois told Reuters, "On the A350,
our plan is to outsource 50 percent of the airframe production,
which would allow us to hand over (part of the project) to partners
participating in the development. The target is 1.8 billion euros
($2.35 million). We have started talking to candidates."
Some industry insiders however speculate talk of outsourcing
might just be a ploy to rattle the many governments with a stake in
EADS' future. Countries facing job cuts might be more amenable to
coughing up the cash EADS needs.
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