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Wed, Oct 11, 2006 - Page 10 News List

New Airbus head warns of cuts

JOB LOSSES EADS co-CEO Louis Gallois was named Airbus chief a week after the firm pushed back its A380 superjumbo by another year and issued a new profit warning


Louis Gallois, the newly appointed head of planemaker Airbus SAS, yesterday warned that there would likely be painful job losses at Airbus in the wake of delays to the A380 superjumbo and a resulting profit warning.

"There will be job cuts," Gallois told France's Europe 1 radio station.

But he said the cuts were more likely to be in administrative and management jobs because the current structure was too heavy and the group needed its blue-collar workers in order to be able to make and deliver its planes.

Gallois, who remains co-CEO of parent European Aeronautic Defence and Space (EADS) company, was named late on Monday to replace Christian Streiff as Airbus chief a week after Airbus pushed back its A380 superjumbo by another year and issued a new profit warning.

Streiff had been at the helm of Airbus for just three months.

An EADS statement said: "The board of directors at EADS has named Louis Gallois as Airbus chief executive, with immediate effect."

It added that Gallois would "keep his functions as EADS chief executive" alongside German counterpart Thomas Enders.

"The new structure will allow for simpler and more effective management," it said.

Gallois said he supports the planemaker developing the A350 to compete with Boeing Co's 787 and will present the project in a "positive'' light to the company's board soon."

"It's up to the board to decide," Gallois said. "I will present the matter and I'll present it in a positive light."

Gallois said Airbus needs to offer planes through "the entire range," and the A350, a widebody long-range plane, falls into a category that represents 40 percent of the entire market.

The global market for large commercial aircraft is worth about US$60 billion annually in sales, now split between Airbus and Boeing.

The US planemaker has sold more than 400 of the new 787s and Airbus hasn't committed to a competing plane because engineering resources are strapped by problems with the superjumbo A380 jet.

EADS co-CEO Tom Enders said last week that Airbus had to prioritize the A380 airliner, which was already two years behind schedule, and would only develop a rival to the 787 if it had the money and engineers.

Gallois also said on the radio interview that the weak dollar had eroded Airbus' competitiveness versus Boeing and the European group therefore needed to cut its cost base, as planned in the "Power8" plan drawn up by Streiff.

Gallois said Airbus cost-cutting measures would have to be evenly split between its French and German operations. He added that Airbus now had a more simplified management structure than before because of his double role.

Analysts have often said that Airbus has been hampered by internal tensions between the French and German parts of the company, but Gallois denied this was the case since Airbus's superjumbo woes stemmed mainly from difficulties installing wiring.

"This isn't a French or a German problem, it's a problem specific to Airbus," he said, adding that Airbus needed to be a better integrated company.

Gallois added he hoped that French President Jacques Chirac and German Chancellor Angela Merkel would pledge their support for the company at a Franco-German meeting later this week.

Under the current arrangement at EADS, which is controlled by French and German interests, the head of Airbus reports to the German co-chief executive at EADS. A German chief executive at Airbus would report to his French counterpart at EADS.

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