Airbus’ woes continue

AP

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PARIS (AP) – Leading French presidential contender Nicolas Sarkozy said Monday that Airbus may need a rescue package, becoming the latest candidate to suggest the state should step in to save the troubled European planemaker.

Airbus has already announced a restructuring plan to shed 10,000 staff and sell, close or spin off six plants as it struggles to survive the fallout from a two–year delay to its A380 superjumbo and the weaker U.S. dollar.

But the company’s plans have become embroiled in France’s presidential campaign. Both leading candidates have suggested state intervention – following in a long French tradition of rescuing prized companies – though Airbus Chief Executive Louis Gallois has warned European governments not to interfere.

With the race between conservative Interior Minister Sarkozy and Socialist Segolene Royal neck–and–neck, Sarkozy has lately toned down his free–market ideas to appeal to more centrist voters, which may partly explain his stance on Airbus. Yet he has also shown a penchant for intervening in the past.

Sarkozy was meeting Monday with Airbus labor unions and employees in Toulouse, southwestern France, where the company is based. He said he would draw conclusions after his talks but that he was thinking about a rescue plan.

"Airbus is a European success, it’s a very technologically advanced company and we can’t let it down," Sarkozy said before his meetings.

"We saved Alstom when I took care of it," he said. "Why not Airbus?"

As finance minister in 2004, Sarkozy engineered a rescue plan for engineering giant Alstom SA that included US$3.25 billion state–orchestrated bailout to steer the train and power plant builder away from the brink of bankruptcy. The bailout brought complaints from EU trade officials.

Any rescue plan for Airbus would come under scrutiny from EU officials and could further inflame trade relations with the United States, which is already pressing complaints at the World Trade Organization over state aid to Airbus.

The United States claims that Airbus has benefited from billions in illegal launch aid, development financing, contributions and debt relief from the EU and its member states. Brussels, in return, accuses Washington of providing vast amounts of hidden support to Boeing through military contracts.

Airbus was the issue of the day Monday for candidates in the April 22–May 6 two–round French election. The French government owns a 15 percent stake in EADS, Airbus’ parent company.

Royal held talks on Airbus on Monday, and she was also expected to discuss the issue with German Chancellor Angela Merkel on Tuesday in Berlin.

Royal has said she would suspend the restructuring plan if she is elected and contribute more government investment in Airbus. She also said the state should reform its laws so that regional governments can take stakes in Airbus.

"The state must emerge from its lethargy and inertia and stop thinking that the market can solve everything," Royal said.

Other more minor candidates also weighed in on Airbus. Centrist Francois Bayrou, like Sarkozy, went to Airbus headquarters for meetings. He said the government must present a plan to help Airbus but added that the state shouldn’t hold the company’s reins.

Far–right candidate Jean–Marie Le Pen, meanwhile, was the rare politician to say the state had no business interfering.

"Not all affairs are the domain of politicians," he told France–Inter radio.

Airbus has said it plans to shed 4,300 jobs in France, 3,700 in Germany, 1,600 in Britain and 400 in Spain over four years – with roughly half the cuts coming from the 57,000–strong Airbus work force and the rest from subcontractors, who currently employ a further 30,000 staff.

The company has said it will seek to avoid layoffs by using voluntary plans such as early retirement. Employee representatives at three German plants that face an uncertain future said Monday that work had resumed after walkouts last week that followed Airbus’s announcement of its restructuring plan.