EADS shareholders fall out over funding of new Airbus A350 jet

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The Independent Online

Fresh doubts over the launch of a new mid-sized Airbus plane surfaced yesterday after its parent company, EADS, was forced to postpone a board meeting because of disagreements over funding of the $12bn project.

The French government was said to be demanding an increase in its shareholding in EADS in return for putting more funding into the A350XWB 250 to 375-seater jet designed to take on Boeing's new 787 Dreamliner.

The board meeting was postponed because of objections on the part of EADS's two other founder shareholders, Germany's DaimlerChrysler and the French media conglomerate Lagardère, to the French government plan.

There are also fears that EADS may have to make a cash call on shareholders to help fund the A350.

Daimler and the French government each own 15 per cent of EADS, while Lagardère holds 7.5 per cent. Germany is said to back plans for Daimler to offload part of its shareholding to two of the country's banks.

Senior Airbus sources maintained earlier this week that EADS could launch the A350 without having to go back to shareholders for more funding. "Funding is an issue but it is not a problem. The cash flow is strong enough to fund the plane so it is not necessary for shareholders to inject more money," the source said.

Airbus executives also said that yesterday's meeting had never been intended as the moment at which the plane would get the formal go-ahead, indicating that this would come some time next week.

EADS management is scheduled to meet workforce representatives next week to discuss cost savings being planned throughout the Airbus organisation. It was being said yesterday that these need to be completed before there can be any A350 announcement.

The Airbus restructuring plan calls for thousands of job losses and possible site closures in order to save €5bn between now and 2010 and €2bn a year after that.

Airbus was forced to scrap the original design for the A350 earlier this year after pressure from customers for a bigger, heavier and more advanced plane. At the time it had received orders for 182 aircraft from 14 customers. Orders for the Boeing 787 stand at 403 from 28 customers.

Airbus's latest global market forecast, released this week, puts the market for the A350 at between 3,750 and 5,300 over the next 20 years. The plane will cost $185m at list prices.