This news clip from Air Transport World’s ATWOnline site is a telling tale of woe for the dollar’s decline in Europe. Pretty candid comments from the normally optimistic bunch in Toulouse….
http://www.atwonline.com/news/story.html?storyID=10938
Tuesday November 27, 2007Airbus’s Power8 restructuring program as originally conceived no longer is sufficient owing to the US dollar’s decline and the manufacturer now needs to take significant measures to rescue itself from a “life-threatening” situation, CEO Tom Enders and parent EADS CEO Louis Gallois said in a series of recent public comments.
Gallois told Germany’s Die Welt that Airbus needs to achieve an additional €1.5 billion ($2.2 billion) in annual savings on top of the €2.1 billion per year it planned to save from 2010 and the cumulative €5 billion it plans to cut by 2010 (ATW, August 2007). “Power8 is meant to defend our competitiveness on the basis of a euro rate of $1.35,” he said. But with the euro now worth $1.48 and possibly rising further, “simple arithmetic” adds up to another €1.5 billion in needed annual savings, Gallois said. He has said repeatedly that Airbus loses €1 billion in profit for every 10-cent decline in the value of the dollar against the euro.
During a speech last week to German labor unions, Enders said that “the dollar’s rapid decline is life-threatening for Airbus.” Gallois asserted that Airbus and other European manufacturers may have to move more production outside Europe. “This is endangering the European high-tech industry,” he told Die Welt.
Enders said that despite the large number of aircraft orders received this year, Airbus likely will report “enormous losses” for the full year. EADS posted a €705 million nine-month loss (ATWOnline, Nov. 13). Enders said Power8 will have to be revised, with the company conducting a full reevaluation of its industrial processes in coming weeks. “There will be no more taboos,” he said. “We need to question our business model. It is no longer sustainable.”
by Aaron Karp