France and Germany try to heal Airbus rift

By Staff
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PARIS, Feb 20 (Reuters) French and German leaders will try to heal a rift over the location of job cuts and investments at planemaker Airbus amid reports that German board members of parent EADS blocked a restructuring plan on Sunday.

French Prime Minister Dominique de Villepin said on Tuesday he had talked with Chancellor Angela Merkel about the problems at Airbus and confirmed it is seeking to cut 10,000 jobs.

He also confirmed on RTL radio that Merkel and French President Jacques Chirac would discuss the problems at a summit meeting on Friday, as reported by Reuters on Monday.

EADS shares eased 0.2 percent to 25.78 euros by 0958 GMT.

Addressing one of the key themes in upcoming French presidential and legislative elections from April to June, Villepin said the distribution of job cuts needed to be fair and there should be no forced redundancies.

''This company is largely Franco-German, very European and there needs to be an equitable distribution of efforts between the countries,'' Villepin said.

While EADS's French board members, including co-Chief Executive Louis Gallois and co-Chairman Arnaud Lagardere, proposed an 'equitable' split of cost cuts and job reductions, German representatives like co-CEO Thomas Enders and co-Chairman Manfred Bischoff held out for 'equality'.

The EADS board has five Daimler-Chrysler nominees and five French-appointed nominees.

Germany's Financial Times Deutschland said on Tuesday that German carmaker DaimlerChrysler was responsible for halting the planned restructuring because it was worried France would keep too much of the manufacturing work and had concerns over the cost-cut targets.

DaimlerChrysler declined comment.

''We need to find a solution that can be acceptable for the one and the other. President Jacques Chirac will meet Angela Merkel on Friday so you see that this is a question which we want to treat at the highest possible level,'' Villepin said.

SHOCK DELAY Airbus on Monday postponed a major announcement on job cuts planned for Tuesday, saying European nations could not agree how to share the work on its next aircraft, the wide-body A350.

The cost-cutting plans were originally triggered by delays in the company's A380 superjumbo, which drove Airbus into loss last year and bled cash from EADS.

Analysts said the restructuring would also shape the company's longer-term future as it chooses a site for assembly of the mid-sized A350 ''Extra Wide Body'', or XWB.

''This is a difficult issue which needs courage and determination and we have to safeguard the industrial future of the group,'' Villepin said.

''10,000 jobs is what is in the plan, but it is about the way this will be implemented. We have said no forced redundancies,'' Villepin said.

''We need to find a solution rapidly, via negotiation, in concert and in a transparent way we have to find a good solution so that this company can again rethink its future and go forward,'' Villepin said.

Some French newspapers blamed the deadlock on Germany.

Le Figaro talked about a Franco-German 'divorce' while Les Echos said on its front page: ''The restructuring of Airbus blocked by a German veto''.

A source close to Chirac told Reuters on Monday the issue would be discused at the next regular Franco-German summit in Berlin on Friday.

The French government owns 15 percent of EADS, French media group Lagardere owns 7.5 percent, and DaimlerChrysler defends German interests with voting rights for 22.5 percent despite loaning the stock to raise cash.

Russia last year bought 5 percent, roughly equalling Spain's stake, but has been kept at arm's length by core shareholders.

EADS shares rose on Monday after Qatar Investment Authority said it was in talks to buy a stake in the aerospace group.

REUTERS CS PM1606

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