EADS crisis set to dominate French-German summit

PARIS, Oct 12 (Reuters) German Chanceller Angela Merkel and French President Jacques Chirac are expected at a summit on Thursday to try and soothe tensions triggered by fresh management turmoil and production delays at EADS's Airbus unit.

Germany and France are at the heart of Europe's flagship aerospace group, and an official close to Chirac said on Wednesday Paris wanted Berlin to help solve the crisis triggered by fresh delays to the A380 superjumbo built by Airbus.

But worries over the fallout from job cuts from the drastic cost-cutting plan Airbus says is needed to solve its problems have tested the fragile harmony of the two main partners, while Spain, which has a 5 percent stake, is also concerned.

The importance of Airbus as an industrial project that has enabled Europe to challenge U.S. aerospace dominance means the issue is likely to top even issues such as Iran and North Korea at the summit when ministers meet in a joint cabinet session.

The official said France hoped Germany would show a firm political commitment. ''What we hope for is political engagement by Germany and that this ... should be for the long term. It is up to Germany to decide how it sees things,'' he said.

POLITICAL WRANGLING Amid a fresh outbreak of the political wrangling that has overshadowed the restructuring plans, new Airbus president Louis Gallois, who took over only this week, told a German newspaper no decisions on plant closures had been made.

But he sought to ease German concerns that plants in Germany would be most heavily hit, saying the impact would be shared.

''I don't believe that one can demand, for example, that the Germans pay for the French or vice versa. One must find a good balance,'' he told the Frankfurter Allgemeine Zeitung in an interview due to be published on Thursday.

Problems related to the production of the A380 have led to two-year delays in deliveries and a 4.8 billion-euro (.03 billion) future profit shortfall.

They forced Airbus chief executive Christian Streiff to quit on Monday after failing to win EADS support for his methods in pushing for politically sensitive job cuts.

That has left Gallois, who also jointly runs EADS, with the daunting task of pushing through an overhaul likely to involve significant cuts among the 55,000 Airbus staff.

The German government, already bridling at French charges that engineers in Hamburg were to blame for the A380 fiasco, repeated it would ensure that any job cuts were shared fairly.

Germany is worried about French influence growing too strongly but shares French concerns about Russia's desire to raise its 5 percent stake in EADS and play a greater role.

President Vladimir Putin was rebuffed by Germany on Wednesday over his desire for a bigger Russian stake in EADS.

Putin had hoped to further Russian business interests on a two-day trip to Germany.

Germany worries Moscow is trying to use revenues from its vast oil and gas reserves to wield greater global influence.

The official close to Chirac declined to comment on reports the German government wanted to take over part of the stake owned by the main German shareholder, carmaker DaimlerChrysler.

REUTERS DH RAI0455