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Tue, Feb 27, 2007

EADS Board Votes Its Support Of Airbus Restructuring Plan

Details Of Power8 To Be Revealed Wednesday

After a week of wrangling over job cuts and possible plant closings, on Monday the board of directors at European Aeronautic Defence and Space Company (EADS) unanimously approved the Power8 restructuring plan for troubled planemaker Airbus.

Details of the controversial plan -- which, according to earlier reports, may include as many as 10,000 jobs lost, and a shift in airplane production between Airbus plants in France and Germany -- will be released Wednesday, after company officials were informed and labor unions were given the chance to weigh in.

While still playing details close to the vest, EADS was forthright on the intent of the restructuring plan -- to "face the challenge of the US dollar weakness," according to the Associated Press.

Airbus, already beset with a series of delivery delays in its flagship A380 program, suffered further losses last year due to its current method of pricing production costs in euros -- and its aircraft sales in US dollars. That proved to be an advantage to the European planemaker in the past... but Airbus has seen steep losses in today's economic conditions.

By cutting costs, and shifting more supplier and contract work to dollars, EADS hopes a restructured Airbus is able to recoup some $6.6 billion in losses against future profits stemming from the delayed A380 -- and generate another $2.8 billion in annual cost reductions.

The plan is also necessary to provide funding the $15.3 billion development cost of the Airbus A350, the planemaker's reworked answer to the Boeing 787.

As Aero-News reported last week, Airbus CEO Louis Gallois was forced to postpone his planned February 20 annoucement of the plan after the French and German sides of the EADS board couldn't come to terms on where jobs would be cut, and which plants might be closed or sold off. This weekend, reports surfaced Airbus plans to end its 35-hour work weeks for employees -- adding five hours to the week, while keeping pay levels the same.

That is likely to be just one of many points of contention with workers, once details of Power8 come to light. Stay tuned... the next few days promise to be VERY interesting.

FMI: www.eads.com, www.airbus.com

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