EADS Divesting Six Plants to European Firms
EADS and Airbus have chosen three European companies as the preferred bidders for their controlling stake in the six factories marked for divestiture as part of the Power8 restructuring program. The news comes as a severe blow to Wichita’s Spirit Aerosystems, widely considered the top candidate to take control of all six facilities. The preferred bidder list includes France’s Latécoère for the Airbus plants in Méaulte and Saint Nazaire Ville, France; GKN for the wing component and subassembly manufacturing facility in Filton, UK; and Germany’s MT Aerospace for the Nordenham, Varel and Augsburg plants in Germany.
Hoping to reach final agreements “as soon as possible,” the EADS board of directors has authorized management of EADS and Airbus to enter negotiations with the bidders on any remaining issues and final due diligence. The board said it expects substantial progress on the share purchase agreement in the first quarter of next year and to close on all the transactions by next summer, at which time the new owners would take control of the assets.
The partner selection for Filton will allow for an outright sale of the manufacturing part of the site to GKN. For the French and German sites, the agreement with Latécoère and MT Aerospace will take the form of joint ventures, in which Airbus will retain a “substantial” minority shareholding. Airbus will retain the option to withdraw completely after three years. The structure will allow the airframer to closely monitor the transition during the period of A350 XWB development, while substantially slashing EADS’s cash outlays, said EADS in a statement. It also said that Airbus does not intend to interfere in the majority shareholder’s management of each plant.
The Airbus plants targeted for divestment employ a total of 7,400 employees and represent €1.4 billion of Airbus’ 2007 cost base. EADS Defence & Security’s plant in Augsburg employs 2,000 employees and represents around €450 million of its cost base in 2007. About 70 percent of the Augsburg plant’s revenues come from Airbus.
The company now plans to allocate A350 XWB work packages to the future tier-one partners in Filton, Meaulte and St. Nazaire, as well as in Nordenham, Varel and Augsburg. The pace and schedule of final negotiations with the preferred bidders at this stage conforms with the existing A350 XWB development timeline, it said.
“This decision is an important milestone for Airbus’ new strategy and Power 8 program,” said Airbus president and CEO Tom Enders. “We will work to progress and conclude the negotiations as swiftly as possible. At the same time, we can now begin to establish long-term partnerships with three first tier suppliers for the A350 XWB, who will share workload, investment, risk and future benefits with us. The bidders will now be invited to the A350 XWB development plateau. This process will generate strong tier-one partners for Airbus, and will allow the sites to further develop and acquire the required technologies to remain competitive in the future.”