Includes Plans To Build Parts Factory In Tunisia

EADS appears to be betting a weak US Dollar will remain a problem for its Airbus division through at least 2012. It's union workforce isn't likely to be happy with its response.

Reuters reports that the Airbus "Power8" restructuring plan, which is planned to produce over two-billion euros in annual cost savings by 2010, will be taken further, in an attempt to save another 650 million Euros a year by 2012. The new plan, called "Power8+," includes plans to build aircraft parts in Tunisia to save costs.

Airbus is trying to stay competitive with Boeing, which regained the worldwide lead in new aircraft orders in 2007. Both manufacturers have seen weaker sales since the start of 2008, but both also enjoy record order backlogs. Boeing's costs are held in check by a falling dollar, while Airbus costs rise, and its products become more expensive.

The idea to manufacture in Tunisia originated with French Airbus supplier Latecoere, which makes aircraft doors and other parts. The company had hoped to buy two Airbus plants in France back in the spring, and operate them in conjunction with a new plant in Tunisia. When capital markets dried up, the plan was scuttled.

EADS Chief Executive Louis Gallois (above) told the newspaper, Le Monde, that Airbus liked the plan enough to build the new Tunisian plant itself.

"Airbus will take over Latecoere's proposal to set up in Tunisia to make ordinary parts and invest in more sophisticated production in France, especially for composites," Gallois said. "We'll do the same in Germany and Spain."

The company has moved to assure its unions that there will be no additional job cuts in Europe, where 10,000 employees and contractors are already slated for furlough.

The stock markets liked the announcement. EADS shares closed up two percent on the Paris exchange Tuesday.

FMI: www.airbus.com