Axe poised over thousands of jobs at Airbus

Thousands of jobs could be shed by British Aerospace and its three partners in Airbus Industrie under plans for a radical overhaul of the European aircraft manufacturer.

Proposals for restructuring the consortium with the eventual aim of turning it into a conventional public company will be presented to the Airbus board in late June.

The four partners employ about 30,000 in Britain, France, Germany and Spain. Jean Pierson, Airbus managing director, said yesterday that the restructuring could enable it to make large cost savings of up to 20 per cent, making Airbus more competitive with its American rival Boeing.

This could entail up to 6,000 job losses across the board, including more than 1,000 in Britain, but Airbus executives would not be drawn on the numbers.

Mr Pierson said the biggest scope for cost-savings was in the ranks of white collar staff where there was vast duplication of activities such as purchasing.

British Aerospace employs around 7,000 directly on Airbus work at two main sites in Bristol and Chester, but the total number of jobs in Britain dependent on Airbus work is put at 25,000. A 20 per cent cost reduction could result in up to 1,500 job losses in the UK.

A further 8,000 workers are employed by Aerospatiale in France. The two other partners are Deutsche Aerospace and Casa of Spain. Airbus employs 2,000 people in Toulouse.

The report on the restructuring of the consortium, drawn up by Airbus chairman Edzard Reuter will set out several options. These will range from retaining Airbus as a group of economic interests (GEI) to a much more fundamental overhaul whereby the four partners become equity shareholders in a conventionally structured company.

Another option is to create an intermediate structure short of full plc status. Mr Pierson ruled out a flotation of Airbus in the foreseeable future.

Under the present structure the workload of Airbus is parcelled out according to the shareholdings of each partner. BAe, which has a 20 per cent stake, makes aircraft wings. But this has been criticised as an unwieldy and inefficient system that increases costs massively.

Converting Airbus into a plc would allow it to award work on the basis of competitive tendering.

Crucial issues still to be resolved include what assets each partner would put in, how they would be valued and what overall authority Airbus would have.

Germany has already warned that it will not help fund the next Airbus project, the $8bn (pounds 5.3bn) development of a 500-plus seater super-jumbo, unless the consortium is restructured. BAe has been pressing for Airbus to become a plc for nearly a decade.

With Aerospatiale now apparently also committed to overhauling Airbus Mr Pierson said support for change was becoming overwhelming.

"We are in the last hundred yards of the race and we are approaching crucial decisions," he said. "The enthusiasm is there now whereas 10 years ago there wasn't the spirit. Now all that has changed. The competition is tougher not just on price but on product and service and we have reached the point where everyone realises it is time to do something." Cost-cutting would be concentrated on the Airbus "bureaucracy".