France, Germany seek to resolve splits over EADS

By @ibtimes on

French and German leaders hold a one-day summit dominated by the future of Airbus parent EADS on Monday, seeking to halt in-fighting blamed for their worst recent industrial crisis.

Rivalry between French and German camps inside Europe's biggest aerospace and defense group is widely blamed for delays to the world's largest airliner, the Airbus A380 superjumbo, and has strained the two nations' political and economic relations.

Despite the pressing problems facing the group, Germany appeared to be resisting French attempts to push through a speedy management shake-up.

French President Nicolas Sarkozy will host German Chancellor Angela Merkel at the Toulouse headquarters of Airbus, which was forced to announce 10,000 job cuts earlier this year to claw back losses inflicted by output delays and a weak dollar.

France blames the crisis on an unwieldy structure at EADS, which has French and German co-chairmen and co-chief executives to preserve the interests of each country. The intricate system has failed to prevent dozens of corporate struggles at EADS.

Sarkozy met Airbus workers and called for changes to the way EADS was run when he was elected in May, following a campaign marked by public outcry over Airbus job cuts and squabbling between Paris and Berlin over the way they were shared out.

France wants the double management system scrapped, but is pressing to retain control of Airbus which makes up most of EADS sales and is responsible for 55,000 jobs. Germany has made plain it wants to keep the top EADS job as the price for any deal.

An aide to Sarkozy said on Sunday the two sides had not reached an agreement but that he was optimistic about the talks.

However a senior German government official said Merkel, conscious to preserve a delicate German-French power balance at EADS, was not in a hurry to conclude a deal.

There is no time pressure, the German official said.

Sarkozy's energetic lobbying for a deal reflects French political frustrations that the French state has limited power in the running of EADS, even though it owns 15 percent.

Day-to-power lies in the hands of two core industrial shareholders -- French conglomerate Lagardere, which owns 7.5 percent, and German car firm which owns 22.5 percent. Together, they nominate the dual chairmen and chief executives.

Any changes in structure would mean reopening a shareholder pact drawn up when the company was founded in 2000, though this is a risky enterprise because both sides are anxious not to disturb the delicate power balance inside the company.

Germany appears to have scotched, for now, initial French proposals to go further by opening up the pact to newcomers.

Sarkozy and Merkel will have a first meeting in the morning followed by a lunch with staff and the chief executives in the company restaurant. They will also meet top shareholders.

A joint declaration is expected around 1115 GMT before a second round of bilateral talks in the afternoon.

Sarkozy and Merkel will announce their findings at station 40 in the cavernous A380 assembly plant in Toulouse -- out of sight of a different part of the building where engineers pore over botched A380 wiring at long trestle tables. The bad wiring was blamed on the refusal of plant managers to co-ordinate.

Since Sarkozy came into office, he and Merkel have formed a formidable team at the international level, joining together to pressure U.S. President George W. Bush to support global climate change efforts at a G8 summit in June and doing a good-cop, bad-cop act to win Polish agreement on European Union reforms.

But the cooperation has not always been smooth.

German weekly Wirtschaftswoche said on Saturday that Merkel was getting worried about the various plans and declarations by Sarkozy. Not only does he want to move fast on EADS, but he has also openly blamed the strong euro for the woes of the group and has urged action from the European Central Bank (ECB).

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