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Business

Airbus to Start Hiring After EADS Pentagon Coup

After EADS landed a $35 billion (23 billion euro) contract from the US Defense Department, its plane-making subsidiary, Airbus, is set to start hiring. EADS will, however, continue with its cost-cutting measures.

A man seen at work through the window of an Airbus plane in Hamburg

Airbus will be needing new hands in Alabama

"I don't believe that the plant in the US will make long-term adjustments irrelevant," EADS CEO Louis Gallois told the Handelsblatt business daily on Monday, March 3. Gallois said that the low dollar exchange rate was causing the aeronautics and space company to relocate production outside of the euro zone.

With an exchange rate of above $1.50 to the euro, the company needed to continue cutting costs, Airbus chief Thomas Enders told Handelsblatt.

The company prices its aircraft range in dollars but pays many of its expenses in euros. Thus, a $0.10-decline in the value of the dollar costs Airbus around 1 billion euros in turnover.

EADS plans to build a plant in Mobile, Alabama, to put the finishing touches on the 179 aerial tankers that EADS and its US partner, Los Angeles-based Northrop Grumman, have been commissioned to deliver to the US Defense Department.

The Pentagon's decision to award the contract to the European aerospace consortium triggered protests among Boeing workers in the United States. The breakthrough also led to an immediate boost in EADS' share price on Monday. Shares were trading 7.4 percent higher at 18.72 euros at noon in Paris.


Manufacturing instead of administrative jobs

Thomas Enders and Louis Gallois

The weak dollar is bad for Enders' (l.) and Gallois' business

Enders said the plant in the southern United States would also be used to build freight planes. Gallois told Handelsblatt that 1,300 jobs would be created there.

Airbus has been pursuing its Power 8 program to reduce costs by around 2 billion euros since last year. The measures include cutting 10,000 jobs and selling six plants in Europe.

Though Airbus would stick with the program, Enders said there wouldn't be additional large-scale layoffs.

"With full order books, we can't at the same time cut many thousand jobs," he told Germany's Tagesspiegel daily.

Power 8 had surpassed its aims in 2007 and led to savings of more than 300 million euros, Enders said. Thirty percent of the 10,000 administrative jobs due to be cut by 2010 had already been eliminated, he added.

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