EADS says weak dollar threatens Airbus
BERLIN (Reuters) - The sharp decline of the U.S. dollar poses an "existential" long-term threat to Airbus that will force it to shift production to dollar-zone countries and rein in development plans, the head of Airbus parent EADS said.
In an interview with German weekly Welt am Sonntag, EADS (EAD.PA) Chief Executive Louis Gallois echoed recent comments made by Airbus chief Tom Enders, who has described the dollar slide as life-threatening for the Toulouse, France-based manufacturer of large commercial jets.
"It is very clearly an existential threat -- not immediately, but in the long-term," Gallois told the newspaper in a preview of an article to appear on Sunday. "On this basis we can no longer plan effectively for the future."
Airbus sells its planes in dollars but close to half of its costs are in euros, making the company sensitive to swings in the euro/dollar rate despite efforts to hedge its currency exposure. On Friday, the euro hit a record high of $1.4966.
The company is already struggling to rebound from costly delays in its A380 superjumbo jet, which have forced it to proceed with plant sales and slash 10,000 jobs.
This so-called "Power8" restructuring program is based on a euro/dollar rate of $1.30-$1.35, however, and now Airbus has been forced to re-examine the planned cost cuts because they are insufficient.
"We will have to rein in our development plans," Gallois said. "We will have to shift parts of our production and our supplier base to the dollar zone."
He added: "The decline in the dollar exchange rate has been so rapid that it is impossible to react swiftly enough to it. It is endangering the European high-tech industries."
In a separate article to appear in newspaper Euro am Sonntag on Sunday, an Airbus manager said the planemaker could no longer do without development aid for its new A350 mid-sized jet given the pressures from exchange rates.
"Unlike in the case of earlier models, Airbus has so far not taken advantage of any public sector development loans for A350s," the newspaper quoted the anonymous Airbus manager as saying. "Given the further worsening of the dollar exchange rate we cannot afford to do so any longer."
The manager was quoted as saying there were no plans for redundancies. But German weekly magazine Focus reported that Airbus employees would be expected to lengthen their weekly working hours to 40 from 35 without compensation.
Citing an internal group of experts at the firm, Focus also said that Airbus planned to use more sub-contractors from dollar-denominated countries and to build up more plants outside Europe such as in China, Russia, India and Arabic countries.
(Writing by Noah Barkin and Vera Eckert. Editing by Peter Blackburn)
