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 Sonntag.

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 euros."

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 weekend.

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 suffer losses.

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 losses."

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.

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