Airbus fears ‘weak-dollar death’

BBC
22.Nov.2007

The weak dollar is threatening the survival of European planemaker Airbus, chief executive Tom Enders told workers in Hamburg on Thursday.

And the firm once again warned that its cost saving plan would have to cut deeper to counter the impact of the weakening US currency.

Airbus is owned by European aerospace and defence group EADS.

“The dollar’s rapid decline is life-threatening for Airbus,” Mr Enders said in the speech to employees.

“The dollar exchange rate has gone beyond the pain barrier,” Mr Enders added.

And he said that Airbus’s entire business model needed reviewing as “reasonable processes of adjustment” were hardly possible now, he said.

‘Break even’

Airbus is already shedding about 10,000 jobs and selling plants as part of its Power8 restructuring plan after delays to its A380 superjumbo drove the planemaker into a loss last year.

The dollar has hit new record lows against the euro this week, something which Airbus says favours its US rival Boeing.

Earlier this month Airbus warned it may have to deepen its planned restructuring after steeper than expected third-quarter losses.

It said a net loss of 776m euros ($1.14 bn; £541m) - as against a loss of 189m euros in 2006 - was down to delays with its A400M military transport aircraft.

And it said full-year earnings would only “roughly break even”.

EADS said it might have to make more savings, as cost-cutting plans were drawn up when the euro was weaker.

And back in September, Airbus chief operating officer Fabrice Bregier said a further 1bn euros might have to be added to a savings plan which was originally based on a $1.35 euro.

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