The chief executive of EADS warned Thursday that widening losses at its Airbus subsidiary and the rapidly eroding value of the U.S. dollar could force the group to slash an additional €1 billion in operating costs - a move that could result in further job cuts at the troubled European plane maker.
In the nine months since Airbus embarked on a huge restructuring to cut costs, the euro has appreciated from about $1.35 to more than $1.46, rendering those efforts inadequate if the company is to remain competitive with its U.S. rival, Boeing. For Airbus, which sells its airplanes in dollars but incurs about 50 percent of its costs in euros, every gain by the euro of 10 cents against the dollar represents €1 billion in lost profit.
Describing the dollar's steady slide against the euro as like a "sword of Damocles" hanging over the company, the chief executive, Louis Gallois, said managers at European Aeronautic Defense & Space were determined to take new steps to protect Airbus from "unbearable" exchange rate fluctuations.
"We have to react," Gallois said in a French radio interview. "We must find additional savings of roughly €1 billion by 2010 or 2011."
Boeing, which has a cost base almost entirely in dollars, does not face this challenge, Gallois said. "There are not many companies in our situation," he said. "We are in a duopoly where the financial situation of our competitor is completely different from ours." |
