Airbus bails out units but EADS unaffected

* Airbus units need internal capital boost

* EADS says move is neutral on parent group

* EADS shares down over 6 percent

* Oddo says no EADS cash call now, perhaps end-2009

(Releads, updates shares)

By Marcel Michelson and Tim Hepher

PARIS (Reuters) - European planemaker Airbus EAD.PA is pumping money into national subsidiaries following cost overruns on major projects, but the internal shuffling of capital will leave parent EADS EAD.PA untouched, the company said on Friday.

The capital and related corporate reorganisation, first reported in financial daily Les Echos, follows cost overruns on the A380 superjumbo and military A40M and currency exposure that left the coffers of its national entities looking uncomfortably low.

“Expenses for running programmes are with the national companies and profits with the parent Airbus group. This created an equity imbalance that will be solved through these legal and financial means,” an Airbus spokesman said.

Les Echos had said EADS would need to provide the cash next year to cover deficits at national Airbus units unless EADS simplified Airbus’s legal structure to allow for an internal redistribution of funds.

The move will involve merging national entity Airbus France SAS with an existing French holding company within the Airbus group, Airbus Holding SA, the spokesman said.

The structures of the other national entities will remain unchanged -- Airbus Germany, Airbus Spain and Airbus UK.

“This new Airbus is a step towards further integration. It will help us to become more efficient” the spokesman quoted chief executive Tom Enders as saying.

An EADS spokesman said the impact of the move on EADS itself would be “completely neutral.”

Brokerage Oddo Securities said the move was unlikely to affect EADS’s own capital requirements, at last for now.

“The (Airbus restructuring) operation will take place through intra-group transfers of capital. EADS has 14.2 billion euros in funds available which, to our mind, excludes the need for a cash call,” Oddo analyst Yann Derocles said.

However, he noted that there could be a need for the EADS group to seek a capital increase in about a year’s time.

EADS’s shares were down 6.7 percent at 11.55 euros by mid-session, extending a 43 percent decline so far this year.


The change in legal structure at Airbus France will be carried out in the coming months, the Airbus spokesman said, adding that other changes would be made to also restore equity at other national Airbus units.

“It is a reallocation of resources to restore the equity balance at national company level” he said, adding; “There is no impact on day-to-day operations and it will help to simplify governance support integration.”

Les Echos said some national entities of Airbus had negative equity with Airbus France needing 1.2 billion euros, Airbus Deutschland 800 million euros and Airbus UK 600 million euros.

Airbus has been hit by cost overruns on its A380 super jumbo plane, delivery delays and a strong euro versus the dollar.

EADS in November edged up its 2008 profit goal and also made a new 341 million euro provision for delays in a military project, the A400M.

European Aeronautic Defence and Space Company N.V. (EADS) was formed by the July 2000 merger of DaimlerChrysler Aerospace AG (DASA) of Germany, Aerospatiale-Matra of France, and Construcciones Aeronuticas SA (CASA) of Spain.

Airbus itself was created 30 years ago to challenge U.S. dominance of the passenger aircraft market.

It remained a multinational European consortium with the industrial partners operating as national companies -- Airbus France, Airbus Germany, Airbus UK and Airbus Spain until 2001 when it became a single integrated company owned by EADS and UK partner, BAE Systems BA.L.

Five years later EADS became sole owner when BAE sold its 20 percent stake.


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