 | Not the best title since the French won't go to war over anything, but you get the idea. |
Shareholders in the Franco-German aerospace group EADS are at war after the Paris government said it wanted to increase its stake in the company to fund development of a new long-range A350 aircraft for its Airbus division.
EADS cancelled a board meeting yesterday when France indicated it would block a proposal by the company's two main industrial investors to raise a substantial amount of the aircraft's €10bn (£6.78bn) launch aid from the capital markets.
| Since the French would rather go down with a sinking airplane maker than make the changes that would open up their economy and generate the needed jobs. |
Giving France a higher stake in EADS risks upsetting the delicate political and commercial balance. The French state and Lagardère own 29.99pc through a holding company. DaimlerChrysler owns 22.9pc, and the Spanish government 5.48pc. The rest of the shares are in free float. A source said France wants to raise its holding by up to 15pc. DaimlerChrysler has already said it wants to reduce its stake and the Bonn government is trying to ensure the shares are placed with German institutions. The German government has said it does not want to buy a direct stake in EADS.
| They'd rather someone else buy the shares but at the same time don't want the French to get the upper hand. But what private German company would buy the shares given that their own government won't touch them? |
EADS is in financial crisis because of delays and cost overruns on Airbus's A380 super-jumbo jet. The problems have sparked a wholesale review of Airbus operations, and a report next year is expected to recommend factory closures. If France has the upper hand in the EADS boardroom, Germany fears it could be forced to bear the brunt of any cut-backs.
| You could bet the farm on that one. |
The Toulouse-based Airbus believes it must fund the development of its proposed A350 extra wide body (XWB) passenger aircraft to help meet the challenge from a resurgent Boeing.
| And since they can't sell paper on the commercial markets right now, they go to the governments with their hands out ... |
The British government is expected to be asked to provide some launch aid for the A350 because of Airbus's extensive UK interests. The company employs 12,000 people in the UK, mostly making aircraft wings. However, any launch aid is likely be linked to promises that Airbus does not cut back its UK manufacturing sites.
This week Airbus executives were in London to set out the company's long-term market outlook, which sees demand for more than 5,000 mid-sized planes like the Dreamliner 787 A350 over two decades. Although Airbus received some orders for earlier versions of the 250-seater A350, the new XWB model, unveiled in July, has seen no contracts. The aircraft is designed to compete with Boeing's 787 Dreamliner, which has 432 firm orders. The executives said a decision on whether to press ahead with the A350 would be made before the end of November. |