Airbus Cries Uncle, Boeing Tightens the Noose

The news this weekend from Europe is that Airbus, the European quasi-public aerospace company, and Boeing's biggest competitor, has delayed the announcement of its planned restructuring. The reason: France and Germany, the two main governments behind the project, are battling over how many layoffs they must absorb in their respective countries. Reuters reports the following: In a sign of renewed tensions within EADS, French co-CEO Louis Gallois -- who also heads Airbus -- defended his restructuring plan in a separate statement issued by the Toulouse, France-based aircraft maker. "I made proposals which I deem balanced, both from an industrial and a technological point of view, and which serve our objective of economic competitiveness," Gallois said. "Airbus cannot delay any longer implementing Power8," he said. France's two main financial newspapers, Les Echos and La Tribune, reported Monday that Gallois is seeking to cut close to 10,000 of the company's 55,000 jobs, sell off some production units and centralize assembly of the A350 in France, in exchange for agreeing to build a future revamp of the single-aisle A320 airliner in Germany. Under the plan, France and Germany would each contribute between 3,000 and 4,000 of the job cuts, Les Echos said. Neither paper named sources. Airbus and EADS both declined to comment on the restructuring proposals or the discussions. You will recall recently I discussed the very favorable position in which Boeing's new CEO, Jim McNerney finds himself. He has new aircraft that the airlines want, and he is on schedule to deliver them. McNerney has the manageable problem of motivating all of the "princes" at Boeing to subjugate their interests for the good of the company's competitive battle against the "kings" at Airbus. This weekend, France and Germany, two of the "kings" are at odds over who has to absorb the most layoffs and who gets to build the new airplane. Two CEOs, three countries, countless unions, overdue planes, and Airbus' blood is in the water. There are plenty of "kings" but no captain. Jim McNerney left a great job at MMM to take a job that nobody has done well for a decade at Boeing. Many wondered why; now we know. Airbus is very close to Airbust. Of course the Franco-German consortium will bail out Airbus but at a terrible cost to their competitive position. If Boeing can stay humble, the remainder of the first decade of the 21st century will be theirs. If they can stay hungry, perhaps they will own the second decade outright. We own BA in our Capital Builder investment style. Please review our conditions for using this site.