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Airbus set to cut research funding

Business Materials 25 November 2007 16:17 (UTC +04:00)

Airbus may cut its two billion-euro ($3 billion) research budget to trim costs as the dollar's decline becomes "life threatening'' for the world's largest planemaker, chief executive officer Tom Enders said.

The dollar-euro rate has "passed the pain barrier," Enders told Airbus works-council representatives in Hamburg.

Unions said that with record orders secured this year the comments were "absolute nonsense."

Airbus prices planes in dollars, reducing the value of sales when converted into the European currency. The company also incurs the bulk of expenses in euros, leaving little room to combat the impact of fluctuating rates. Airbus parent European Aeronautic, Defence and Space said November 8 that the dollar's slump required one billion euros ($1.48 billion) in annual savings beyond the 2.1 billion euros already planned.

"The dollar has gone down even further since that was announced and the pace of the decline has increased,'' Airbus spokesman Rainer Ohler said.

"This poses a threat to the Airbus business model. We have to consider measures to control spending, and one of our largest budgets is R& D, so it's obviously under consideration.''

EADS shares closed up 11 cents, or 0.5 per cent, at 21.41 euros on Friday.

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