The Dilemma: Jets Are Built In Euros, But Sold In USD
European aerospace group EADS says
the falling dollar to the Euro may change its plan to sell
factories owned by its aircraft manufacturing division and instead
merge them into a new unit, according to Agence-France Presse.
EADS might decide against selling three Airbus plants in
Germany, EADS stated, as well as its own factory in the southern
city of Augsburg. The original plan, as put forth in the Power8 restructuring
program, called for the sale or outsourcing of seven
sites -- four in Germany, two in France and a plant in Britain.
If this situation continues, "we are going to have to cut our
development projects" and "delocalize part of our production into
the dollar zone," EADS CEO Louis Gallois told the weekly Bild am
Gallois told AFP in September restructuring plans for Airbus
were "calculated on the basis of 1.35 dollars per euro and that
every time the dollar loses 10 cents we lose one billion
The euro's rise against the dollar -- which has discouraged
potential suitors for the factories, while also hurting
profitability at Airbus -- is said to be the reason. The change in
plans came as the Euro inched closer in worth to $1.50 USD over the
The aircraft manufacturer builds its jets in Europe, but sells
its aircraft in dollars -- leaving it vulnerable to serious foreign
exchange effects, and a potential buyer of the plants could also
Thursday, German news weekly Der Spiegel published comments by
an Airbus chief executive, saying the euro's current
record-breaking level against the dollar would result in "massive
In the meantime, EADS is moving its financial dependence on
Airbus and is targeting defense and security contracts.
European media citing an EADS strategy paper, said an initiative
aimed to "reduce dependence on Airbus, which now accounts for 68
percent of sales" of the aerospace group’s revenue will now
go into affect.
Airbus is also considering increasing the working week of its
employees from 35 to 40 hours, with no extra pay.