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Last Updated: Wednesday, 28 February 2007, 16:20 GMT
Q&A: Airbus job cuts
Airbus factory
Airbus says the cuts are being "fairly shared" across Europe
Troubled planemaker Airbus has revealed plans to cut 10,000 jobs at its factories across Europe over the next four years.

The company is facing a raft of problems, including delays to its flagship project to build the A380 superjumbo and squabbles between its various shareholders.

Q: What changes is Airbus proposing?

Airbus wants to cut 10,000 of its 57,000 jobs over the next four years.

Its plans would see 4,300 jobs go in France and 3,700 in Germany. Up to 1,600 jobs are expected to be lost in the UK and 400 in Spain.

The changes will result in more work being transferred to the firm's headquarters and main production facility in Toulouse.

However, the production of wings for Airbus planes will be concentrated in the UK, while Germany will handle the bulk of cabin and fuselage manufacturing.

Airbus is reviewing the future of three of its 16 European plants - in Laupheim, Saint-Nazaire and Varel.

It is also looking for new investors to share the costs of production at three sites, including Filton in the UK, as well as outsourcing more work to other firms.

It has said there will be no compulsory redundancies and that about half of the job losses will come from either temporary workers or sub-contractors.

Q: Why are such large job cuts necessary?

Airbus says that it needs to save 5bn euros between now and 2010 and a further 2bn euros a year after that, making substantial job cuts inevitable.

It says the status quo - with its costs rising and profits falling - is "unsustainable" and that the changes will speed up production and improve quality and reliability.

The firm's financial difficulties stem from a variety of sources.

Its flagship project to build the A380 superjumbo has been plagued by a series of problems and is now two years behind schedule.

Delays to the plane, resulting from wiring problems which first came to light in 2005, are set to cost the firm at least 4.8bn euros.

Airbus must pay compensation to airlines for late delivery of the A380, the first of which will be handed over later this year, while some carriers have threatened to cancel orders.

The company needs to recoup some of this lost money.

A380 plane
Delays to the A380 have been just one of many setbacks

Airbus is also planning to spend 11.6bn euros on building a new mid-sized aircraft, the A350, to compete with Boeing's new 787 Dreamliner.

The project, finally approved in December, represents a huge investment for Airbus at a time when it admits that its own costs are "too high".

Problems with the A380 and uncertainty over the A350 have hurt the business.

Although Airbus says its future prospects are good as demand for air travel increases, it received fewer orders last year for new planes than Boeing for the first time since 2000.

The firm's balance sheet has also been hit by the decline in the value of the US dollar, the currency in which its planes are sold.

Q: How have unions and politicians reacted?

Unions have expressed disappointment and anger at the scale of the cuts and sought urgent discussions with the firm.

In the UK, the Amicus union said it had received assurances from Airbus that it would work to ensure there were no compulsory redundancies.

Asked about the job cuts, Prime Minister Tony Blair said he believed British workers would continue to play a "major part" in the development of Airbus planes.

Q: Why has Airbus taken so long to announce the changes?

Airbus was forced to delay the announcement of the job cuts earlier this month, following disagreements between its various national partners.

France, Germany, the UK and Spain all have a huge stake in the company's future and politicians from all countries have been lobbying furiously to try to protect jobs.

Critics of Airbus say its fragmented structure is highly inefficient and stops it from competing effectively with a revitalised Boeing.

Its relationship with its parent company, Franco-German defence firm EADS, has been strained in recent years because of political infighting and frequent changes of management.

The French government, which continues to own a 15% stake in EADS, has frequently been at odds with other shareholders, including German carmaker DaimlerChrysler.

Until recently, Airbus had two chief executives, representing German and French shareholders respectively. Critics said this arrangement hindered effective decision-making.

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