Airbus faces flak over rescue plan

PARIS (ANYTHINGnews) - European plane maker Airbus faced flak from trade unions and scepticism from investors on Thursday, a day after unveiling a radical restructuring plan which labour groups hope to shoot down with strikes and demonstrations.

In a separate setback, the company announced that it had stopped development of the cargo version of its A380 superjumbo jet following a series of cancellations.

Three clients had placed orders for the giant cargo plane by last November, but two have since been scrapped and a third was also poised to be cancelled.

In France, Germany and Spain on Thursday, unions reacted with anger and bitterness to Airbus's restructuring plan which will entail the loss of 10,000 jobs, the sale of factories and increased outsourcing to sub-contractors.

Three french unions called for a half-day strike at the company's French factories on Tuesday and a pan-European day of action was announced for the middle of the month.

"There's a lot of anger among Airbus employees. Everyone is mobilised," said Jean-Francois Knepper, an official from France's Force Ouviere trade union.

In Germany, staff at two factories stopped work for the second day, and the state premier in Lower Saxony Christian Wulff gave his support, declaring: "We reject Airbus' plans to abandon its plants."

A pan-European day of strike action was announced for sometime between March 14 and 18 by the European metalworkers' union FEM after a meeting in Brussels.

In investment circles, questions were raised about how the measures to save 5.0 billion euros (6.6 billion dollars) by 2010, and 2.1 billion euros a year thereafter, would be put into effect.

Shares in Airbus parent company EADS plunged 4.98 percent to 26.62 euros on the Paris stock exchange in a broadly weaker market.

Analysts stressed that the plan was vulnerable to political meddling, that the company faced a fierce battle with trade unions and that a capital injection was likely to be required.

Furthermore, the company faced a strengthening euro -- making its planes more expensive in international markets -- and risked falling further behind rival Boeing. "

This challenging plan has to succeed in full for the group to remain competitive against Boeing," warned analysts at French investment bank Societe Generale. At Exane BNP Paribas, analysts said: "

The risks linked to execution of Power8 are already significant: the unions could use the French election campaign to mount strong opposition."

French politicians are particularly sensitive to job cuts in the run up to presidential elections in April and May.

The Socialist presidential candidate Segolene Royal called for a moratorium on the plan and expressed solidarity with the workers.

Over four years, Airbus is to cut 4,300 jobs in France, 3,700 in Germany, 1,600 in Britain and 400 in Spain to rectify deep problems which came to light as a result of long delays in its star project to build the A380 superjumbo airliner.

The decision to freeze development of the cargo version of the A380 case came after US freight group Fedex scrapped its order for 10 A380F planes in November after Airbus announced a two-year delay in deliveries.

Fedex competitor UPS said last week that it was also considering cancelling an order for 10 planes this year while the International Lease Finance Corp. (ILFC), which handles aircraft leases, scrapped an order for five cargo planes and chose instead five passenger jets.

Airbus, created in 1970 as a European industrial initiative to compete with Boeing in the strategically important airline sector, was long held up as an example of European cooperation and vision. But by the 1990s, weaknesses in the structure of the company had become apparent and a compromise reorganisation was agreed, with difficulty.

The crisis of the last six months has again raised deep questions about the role of the state in industry, and the place for national interests in a European single market.