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Europe

Merkel waffles on Airbus bailout

2006-10-13

Just another excuse to run the flying turkey pic.

LOL.

German aerospace giant Airbus -- still reeling from the announcement that it's A380 super jumbo jet would be delayed by two years -- continues to rein. In order to protect its role in the complicated structure of Airbus's parent company, EADS, the German government is considering the purchase of German-held shares from DaimlerChrysler. But conflicting public statements made on Thursday by officials in Hamburg -- which, with over 10,000 workers, is home to Airbus's largest German production plant -- and Berlin suggested that the government isn't on the same page.

"You want how much?"

"It is certain that the sale will happen," Hamburg Mayor Ole von Beust of the conservative Christian Democratic Union (CDU) said following a meeting with Airbus's new chief Louis Gallois on Thursday. The mayor said details must still be clarified, but he welcomed the "federal government's decision."

More government involvement always helps to save failing businesses ...

Less than a half-hour later, however, German Chancellor Angela Merkel, also of the CDU, contradicted the Hamburg mayor, saying the federal government had yet to decide whether to purchase shares in the crisis-plagued concern.

It's not like the government can time its purchase of shares for the bottom.

However, Merkel added that it was important to the German government that any potential shareholder also feel an obligation to the EADS and Airbus project, which is often described in the industrial sector as a "European champion" -- a model of cross-border business on the continent. DaimlerChrysler, which with 22.3 percent is EADS's largest single shareholder, is seeking to pare its stake down to 15 percent.

And there's a sucker born every minute ...

Merkel spoke following a meeting with French President Jacques Chirac in Paris -- a tête-à-tête that coincided with a visit by Airbus's new CEO Louis Gallois to the company's Hamburg plant. Merkel said the fact that Gallois was visiting the northern German city served as a symbol that the company considers its Hamburg plant to be an important one. Many of the current production problems with the prestigious A380 super jumbo project have originated in Hamburg, and there is considerable fear that the plant could feel the brunt of any layoffs.

In his statements earlier in the day, made standing side-by-side with Gallois, Hamburg Mayor von Beust said a working group would be established to determine Hamburg's future role in Airbus production. After his 30-minute meeting with von Beust, Gallois stressed that the company faced deep cuts as a result of the current crisis, adding that decisions would be made with input from unions, workers and government leaders. He said that no firm decisions had been made about where to make the cuts. "I don't even have any proposals on my desk yet," he said, dismissing reports of thousands of layoffs as "pure speculation."

"No, no, certainly not!"

Meanwhile, back in Paris, Chirac told Merkel he believed that the pain of any possible job cuts at Airbus should be "harmoniously shared" by the French and Germans.

Which means the Germans should take all the cuts and harmoniously share the savings with the French.

Posted by:Steve White

#13 On Boeing's website this morning: Singapore Airlines signed up for several (10 i think) with additional options for 787-9s, and they aren't even going to get them until 2011 timeframe. What does that say about the A350? (It's dead, Jim)

Posted by: USN, ret. 2006-10-13 14:00

#12 It's the mid size market (777, 787, A-330, A-340) where Airbus is getting absolutely creamed. The small A-320 is doing quite well and is their only profitable line. For example, so far this year Airbus has 226 orders (Boeing 736) but only 36 are wide-bodies (A-330 and above).

Posted by: ed 2006-10-13 12:11

#11 Airbus isn't finished as a company ed, just as a big plane builder. They still have a good market share for mid to small commercial jets.

Posted by: DarthVader 2006-10-13 11:55

#10 Emirates warns on Airbus delays
Airline Emirates has warned that it may cancel some of its order for 45 giant Airbus A380 planes if there are any further delays to the troubled project.
...
Separately, UK airline Virgin Atlantic said it had sent Airbus a new set of proposals relating to its order for six of the 555-seater A380 superjumbos.

Emirates has 30% of all A-380 orders and just ordered 10 of the new 747-800 freighters. Guess they couldn't wait any longer for the A-380s.

Posted by: ed 2006-10-13 11:45

#9 The boys at Boeing may be anal retentive managers and clueless at marketing (i.e. Darleen Druyun), but they are the only company that truly knows how to profitably and reliably build big airplanes. Even Northrop had to import a Boeing management team to get the B-2 build back on track. Given a choice, I try to avoid the lesser breeds of commercial aircraft. Airbus is just another EU welfare scheme.

Posted by: RWV 2006-10-13 11:42

#8 Don't count Airbus out yet. Airbus is supported by France and Germany, who use it for a jobs program. While the $13 billion already spent on the A-380 may sink a commerical company, Airbus does not have to pay the money back unless they make a profit on the A-380.

While Airbus doesn't have the cash flow to develop 787 and next gen 737 competitors, French and German taxpayers do; WTO agreements be damned. The only question is how late the projects will be from the A-380 sucking all the manpower.

Posted by: ed 2006-10-13 11:35

#7 As it was with the Titanic, it's about time for the band to strike up "Nearer My God To Thee".

Posted by: Anonymoose 2006-10-13 11:23

#6 Boeing is already kicking the crap out of Airbus and laughing all the way to the bank.

Airbus is finished as a big plane company.

Posted by: DarthVader 2006-10-13 10:50

#5 Why don't they take the wings off of the 380's and make them the worlds's biggest busses?

Posted by: tu3031 2006-10-13 10:31

#4 Wouldn't this also wind up in the WTO as unallowed subsidies?

I think you need to add a shotgun aiming at that turkey.

Posted by: AlanC 2006-10-13 09:25

#3 Oh dear, the biter-bit!

Posted by: Tony (UK) 2006-10-13 00:48

#2 This will be real interesting, especially since there is language inserted in the USAF tanker proposal that specifically talks about any sort of governmental subsidy. IIRC, the language was inserted at the request of PRO-Airbus congress-critters in an attempt to show no favoritism toward a domestic product.

Posted by: USN,Ret 2006-10-13 00:40

#1 Well the mayor has to say the government is going to bail them out, so no surprises there. This is a bit surprising though;

Merkel said the fact that Gallois was visiting the northern German city served as a symbol that the company considers its Hamburg plant to be an important one.

That's not what I'd think - I'd think that the plant is for the chop, especially when;

Many of the current production problems with the prestigious A380 super jumbo project have originated in Hamburg, and there is considerable fear that the plant could feel the brunt of any layoffs.

and

Meanwhile, back in Paris, Chirac told Merkel he believed that the pain of any possible job cuts at Airbus should be "harmoniously shared" by the French and Germans.

means that the necessary cuts are not going to be made on an economic basis, but rather to satisfy some national quotas, which just means that the underlying problem is not going to be sorted out and so we're bound to see more flying turkey pics over the next few months/years.

I'm not an aviation expert by any stretch of the imagination, but I'm sure Boeing will be watching developments very closely, looking for government prop-ups, which let's face it, are very likely to happen.

Posted by: Tony (UK) 2006-10-13 00:22

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