Airbus to Cut 1,600 British Jobs in European Shakeup

Airbus shook the British aerospace industry yesterday when it announced plans to loosen ties with one of its two manufacturing centres here and axe 1,600 jobs.

The move comes just months after the European plane maker's UK partner, the arms firm BAE Systems, sold its 20% stake in the business.

The cuts in Britain were part of a wider shake-up of the troubled group involving 10,000 job cuts, the closure or sale of three plants in France and Germany and plans for widespread outsourcing, some of which is likely to go to lower cost countries such as China.

Louis Gallois, the new chief executive, said many of the changes should have been made years ago and promised an end to "poisonous" national rivalries which had held back the group. Mr Gallois was brought in to put the company back on an even keel after it hit a crisis from delays to new aircraft and the impact of a falling dollar - while Airbus's costs are mostly in euros, aircraft are sold in dollars.

Half of the operation at Filton, near Bristol, will be handed over to a new joint venture partner. Airbus confirmed that talks had already taken place with interested parties, which are understood to include the engineering group GKN and Italian helicopter manufacturer Finmeccanica.

Most of the 1,600 UK job losses will fall on Filton, which manufactures parts for wings, fuel systems and landing gear on Airbus aircraft such as the workhorse A320 jet.

A second part of the facility, which designs wings, will be untouched by the shake-up while a second plant at Broughton in North Wales will also be largely unaffected.

Airbus said it would deal with most of the job cuts through natural wastage, but the Amicus union said it was "extremely disappointed" by the cuts and the fact that plans for investment in composite wing materials at Filton would only be undertaken with outside help.

Airbus was unable to clarify whether any joint venture partner brought into Filton would have an equity stake in the business. "We have some concerns around the future ownership," said Bernie Hamilton, national officer of Amicus.

Alistair Darling, the industry secretary, said he "regretted" the British job losses but the long-term future for Airbus remained good. "We have fought our corner to ensure the most modern future technology of wing design, manufacture and assembly will be in this country." The aircraft manufacturer, the key rival to Boeing of the US, said it would also find partners for its Méaulte plant in France and Nordenham facility in Germany. Three other sites - Saint-Nazaire-Ville in France and Varel and Laupheim in Germany will either be sold or closed.

Airbus parent company EADS said in a separate statement it would take a €680m (£460m) charge in the first quarter while Airbus said the planned changes would contribute €2.1bn earnings before interest and tax from 2010 onwards. They would also bring an additional €5bn of cumulative cash flow from 2007 to 2010.

Mr Gallois, who has a reputation for boldness after his restructuring of France's national railways, SNCF, said: "We have no choice ... we have to reduce our costs."

But he also said it was time Airbus operated as a single company. "We are fighting against history to create one Airbus. And frankly as a newcomer after ten years [in the aerospace business] I am surprised how difficult it is to find integrated solutions for the management of Airbus.

"We are going from the sky to the ground and now we have to act. Perhaps the best would have been [to do it in] 2000. It's more difficult now because we are not in the same period," he said, referring to when the dollar exchange rate was more helpful and Boeing weaker.

National rivalries, particularly between France and Germany, have long been blamed for inertia at Airbus.

Mr Gallois insisted that top level meetings between Jacques Chirac, the French president and the German chancellor Angela Merkel to discuss the restructuring had not influenced the reshaping of the business.

But Mr Gallois did have a sideswipe at the US, Japan and China which he accused of "playing a game of weak currency". Over the last five years the dollar has declined 40% against the euro.