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bring_it_onSeems like the A350XWB is delayed yet again
EADS core shareholders are at odds on financing A350 XWB jet
PARIS: The question of how to finance a new long-range Airbus jet has led to a showdown between core shareholders of its parent, European Aeronautic Defense & Space, that threatens to delay a decision on the $12 billion project, people with knowledge of the discussions said Friday.
A planned Friday meeting of the EADS executive board at Airbus headquarters in Toulouse, France, was abruptly canceled late Thursday evening, these people said. The decision was made after the group’s biggest private shareholders – the German automaker DaimlerChrysler and the French conglomerate Lagardère – failed to persuade the French government, which owns 15 percent of EADS, to support a public bond issue to raise money for the A350 XWB, the radically redesigned 270-seat jet that Airbus hopes will be a competitor to the Boeing 787 “Dreamliner.”
“The private shareholders want to achieve this financing via the capital markets,” said one person who had been briefed on the situation. “But the French state objects to that. They want a capital increase.”
The French Finance Ministry has proposed an issue of new shares in EADS that would be bought up either by the government directly or by the French state-owned bank, Caisse des Dépôts & Consignations, said the person, who requested anonymity because of the political sensitivity of the issue.
“It looks as if the French are trying to use the A350 as a hostage to increase their influence” within EADS, this person said.
The French state owns its 15 percent stake in EADS through a joint holding company with Lagardère, which owns 7.5 percent. DaimlerChrysler is EADS’s largest shareholder over all, with a 22.5 percent stake, while the Spanish government owns a further 5.5 percent. A Russian state-owned bank, Vneshtorgbank, acquired a 6 percent to 7 percent stake in the group this summer but it does not hold a seat on the EADS board. Shares of EADS are also publicly traded.
A French Finance Ministry spokeswoman declined to comment on the situation Friday, but noted that the government was not represented on the EADS board.
“All decisions of this type are decided by the executive committee of EADS, of which we are not a part,” she said.
Michael Hauger, an EADS spokesman, declined to comment, as did representatives of DaimlerChrysler and Lagardère.
The French co-chief executive of EADs, Louis Gallois, who also assumed the role of Airbus chief last month, has promised investors and employees that a decision would be made on the development of the A350 by Thursday. But a prolonged tussle over the financing program could postpone a ruling until next month or beyond.
After failing to drum up more than 100 orders for the A350, Airbus went back to the drawing board this year and in July introduced the A350 XWB, which is to have a wider fuselage and is expected to make extensive use of lightweight composite materials. But the plane, which Airbus has said will begin deliveries in 2012, is already several years behind the 787, which Boeing says will enter commercial service in 2009. Boeing has already received more than 400 orders for the 787.
It was not clear which of the two A350 financing plans Gallois, a former government official and head of the French railroad, SNCF, supports. Efforts to reach him Friday were unsuccessful. Gallois has, however, been firm in his belief that the A350 is a crucial plane for Airbus.
“I believe that Airbus has to be present across the whole market and the A350 is in the middle of the market,” Gallois said in a French radio interview in October, adding that midsize planes like the A350 and the 787 would soon represent about 40 percent of the commercial aircraft market. Airbus in the past week forecast demand for more than 5,000 midsize planes between now and 2025.
Any effort by Paris to assert more control over EADS is likely to be met with staunch resistance from the German government, though Berlin does not itself own any part of EADS.
France owes its EADS holding to the fact that it was a partial owner of Aérospatiale Matra, the Lagardère unit that was folded into EADS when the company was created six years ago. The German side accepted the large French shareholding reluctantly. EADS’s German co-chairman, Manfred Bischoff, once described the concession as “the toad that we had to swallow” to create EADS.After the EADS management crisis this summer set off by delivery delays to the A380 superjumbo jet, Paris signaled that it wanted to revisit a 2000 shareholder pact, which banned the French state from having a direct role in the group’s management.
“Some people consider today that this pact doesn’t give enough power to the state because I remind you that in this pact it was the industrial shareholders, Lagardère and DaimlerChrysler, who assumed operational control,” the French finance minister, Thierry Breton, said in June.
The power struggle is taking place as Berlin is trying to broker a deal in which several major German banks would buy a stake in EADS while DaimlerChrysler reduced its holding in the company by 7.5 percentage points to 15 percent.
The German government is eager to keep the shares in German hands as a counterweight to French interests.
Separately, the Paris prosecutor’s office confirmed Friday that it had opened a criminal investigation into whether top EADS managers, including the company’s former co- chief executive, Noël Forgeard, were privy to inside information when they sold company shares in March.An investigating judge was expected to be appointed in the coming days to look into the allegations, a court spokeswoman said.
The inquiry follows separate investigations begun in the summer by market regulators in France, Germany and the Netherlands.
http://www.iht.com/articles/2006/11/24/business/eads.php?page=2
Board approval of Airbus A350XWB launch delayed as EADS shareholder funding concerns dominate
Shareholder concerns over the funding of the Airbus A350XWB programme has meant Airbus parent EADS has reportedly cancelled a board meeting scheduled for today.
The meeting, which was scheduled to take place in Toulouse to decide on the industrial launch of the A350XWB, was cancelled at the last minute yesterday evening, reports French business daily Les Echos.
An employee of EADS shareholder Lagardere confirms the meeting has been cancelled, but was unable to immediately give further details. DaimlerChrysler declined to comment, while EADS could not immediately be reached.
Citing industry sources, the report claims the reason for the cancellation is a lack of agreement on the €9-10 billion ($12-13 billion) needed to fund the project among EADS shareholders DaimlerChrysler, Lagardere and the French State.
This is in part due to France’s reluctance to provide the project with repayable finance, which could further aggravate the ongoing US dispute over launch aid. France and Germany are also awaiting guarantees on Airbus’ turnaround plan, says the report.
Possible solutions include the introduction of new Airbus shareholders, joint ventures with industry partners, turning to the financial markets or a combination of these measures, adds Les Echos.
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