EADS Sell-Offs
December 20, 2007
In a joint statement, EADS and Airbus said that they will begin exclusive negotiations with MT Aerospace, a division of Germany's OHB Technology AG for three German plants, France's Latecoere SA for two French plants, and Britain's GKN plc for part of Airbus' operations in England.
EADS hopes to reach a final accord with the companies by the middle of next year.
"Significant progress on the handover is expected in the first quarter of 2008," the group added.
In the case of the divestitures in Germany and France, the accords are to take the form of co-ventures, with Airbus retaining a substantial minority stake for three years to ensure a smooth transition. The English facility, which makes wing components, will be sold outright.
"The ongoing divestment of sites and the building of a network of partners for Airbus allow EADS to focus its resources on core activities," EADS chief Louis Gallois said.
The push to sell the Airbus sites, which together employ some 7,400 workers, is part of a major restructuring of the company's European operations in the face of stiff competition from US rival plane manufacturer, Boeing. Difficulties at Airbus have been intensified by the weak US dollar, which fell to a record low against the euro last month. EADS has said that it loses a billion euros in operating profit each time the dollar drops 10 cents against the euro.
German politicians relieved
Politicians in Germany can breathe a sigh of relief at the decision to keep the three German sites in the hands of a German company. At one point, the US firm Spirit AeroSystems was considered a favorite for some of the plants, adding to fears of job cuts.
Germany's federal government bank KfW has said it would lend MT Aerospace between 300 million and 400 million euros ($430 million to 575 million) to fund its part of the takeover of two sites in Lower Saxony plus one in Augsburg.
The government of Lower Saxony welcomed the news that the OHB Technology subsidiary made the list of bidders.
"It is good that there are interesting prospects for the strengthening of the aerospace industry in Germany and that EADS is involved and retains responsibility," Lower Saxony Premier Christian Wulff said in a statement.
"We are convinced that due to MT Aerospace's knowledge of the sector, it will be able to maintain the plants and, above all, secure jobs and training places over the longer term," he added.
OHB Chief Executive Marco Fuchs said that a private equity investor would be a partner in the acquisition, but declined to confirm union claims that the firm was Cerberus of the United States.