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The World from Berlin

France and Germany Can't Agree on Airbus

While Airbus wallows in difficulties, France and Germany bicker about what to do about it. Is the partnership at risk? German commentators take a closer look.

Europe's state-owned EADS' Airbus division is a mess. Its A380 mega-jet project is over budget. Its planes are two-years late to market. Customers are walking –- airlines from FedEX to Virgin Atlantic recently announced they will take their business to competitor Boeing. But just when things couldn't get worse, political wrangling by two important stakeholders, Germany and France, promises to ratchet up the drama.

The issue at hand? Job cuts. The Germans are complaining that EADS' newly drafted turn-around plan called "Power 8" is little more than thinly laced French economic patriotism. The proposal would keep French jobs safe before the country's April elections by axing about 10,000 mostly German positions and selling off factories near Hamburg.

Unglaublich! Say the Germans.

Au contraire, say the French.

German factories, the French say, must be shuttered because recently retooled French plants are now so efficient that job cuts in France would be senseless. And Paris power brokers are in complete agreement. French Prime Minister Dominique de Villepin told French radio on Tuesday that his government would absolutely oppose French job cuts.

As intractable as this situation sounds, the issue is further complicated by the fact that loans provided to EADS by banks backed by both the German and French governments were contingent on the creation of jobs –- in both countries.

Hoping to catch a headwind out of this Bermuda Triangle of intra-European government debacles, French president Jacques Chirac and German chancellor Angela Merkel plan to meet on Friday in Berlin to hammer out a compromise. Here's what the German papers have to say.

Center-right Frankfurter Allgemeine Zeitung thinks that "reorganizing Airbus is going to test the German-French partnership."

"The history of the European EADS project shows that the often preached about equality in the German-French partnership was seldom attained. To put it bluntly, industrial and technological leadership rested with the French, while the Germans spent heavily to buy themselves into the deal, basically to create jobs here in Germany.

"EADS [French] co-chief Gallois, a product of uniquely Gallic management training, tried to force partner nations to tow the French line. German co-chief Enders stood up to oppose this. Chancellor Merkel and French president Chirac must now work to solve the problem. But the fact remains that Enders was right: the burden of fixing Airbus, as well as the fruits of its future success, must be distributed evenly among all partners."

The conservative daily Die Welt agrees that this issue could effect how policy makers evaluate future deals, but is optimistic about Hamburg as an economic powerhouse.

"Airplane building south of the Elbe River is certainly one of the city's industrial forces, but even without the A380 prestige project, the city will probably be ok." Cuts in other places –- Varel, Nordenham, Buxtehude –- could be tougher, the paper said.

The left-leaning paper Berliner Zeitung thinks Airbus "overextended itself with the A380 project."

"Airbus, just a year ago the pride of European government economic planning, is in need of an overhaul," the paper opines.

"People have been saying that governments should stop meddling in EADS affairs. Business interests should prevail, they say. The company should be more competitive, order should rule. But this isn't realistic. Herein the dilemma: political influence is hurting the company, but to remove such influence, the company's present structure would need to be scrapped.

The paper points out that the German-French idea to build airplanes together was, lest anyone forget, mostly a political one. The most important thing, however, is never to sell the company to non-Europeans."

Indeed, perhaps echoing the state-owned Qatar Investment Authority's announcement Monday to invest in EADS, the paper wrote, "The idea of selling to a foreign investor –- the USA, Russia, or China –- is unthinkable."

Berlin's left-leaning Tageszeitung likens this week's airplane pokering to a boxing match. The first round starts Friday with the government talks. Negotiations among the board members of Airbus' parent company EADS would be round two, the paper explained.

That this has even become a topic of discussion, however, demonstrates "that German clout at Airbus has risen." The Germans are finally seriously standing up "to years of French economic patriotism."

The paper adds that EADS head Gallois's impulse to cut jobs somewhere is a last-ditch attempt to save his own job.

"In the last three years, Airbus has ditched three CEOs due to 'management errors'" the paper notes.

-- Michael Scaturro, 12:30 p.m. CET