Airbus Partners Reach Restructuring Deal

Airbus Industrie’s partners reached an accord on how to restructure the plane maker to make it more competitive with its archrival Boeing Co., though the company refused to release details.

The accord is a milestone for the group, which in recent months was paralyzed by quibbling among the partners about how they should become a single corporate entity.

Airbus said it will make a statement about its agreement once the memo has been signed.

“A memorandum of understanding has been agreed. The MOU will be signed over the next few days and a statement will be issued simultaneously,” the group said in a statement.

As it stands now, Airbus is a marketing vehicle for commercial aircraft made by the four partners--Aerospatiale of France, British Aerospace, Daimler-Benz Aerospace of Germany and CASA of Spain--but there is no company as such. Each of the four partners owns its own assets.

Just what the new Airbus might look like remains a subject of speculation. Previously, executives with British Aerospace and Daimler suggested everything from combining the partner’s aircraft-manufacturing operations, plants and employees to keeping Airbus’ operation limited to a major final assembly plant in Toulouse, France.

What’s certain is that the company would have the status of a free-standing corporation with specific assets and its own managers, autonomous from the shareholders.

The need to create a corporate entity with streamlined management has become more urgent in the face of Boeing Co.’s mid-December agreement to acquire McDonnell Douglas Corp. Assuming the acquisition wins regulatory approval, that would leave just two commercial jet makers in the market: Boeing and Airbus.

Boeing and McDonnell Douglas have objected to government subsidies for Airbus and have demanded greater financial disclosure by the consortium.

Analysts said it is likely a new structure would make Airbus a tougher competitor for Boeing as it would free the European maker from the nationalistic interests of its partners.

“Airbus makes a good product,” said Peter Jacobs, an analyst at Ragen MacKenzie in Seattle. “Their problem is efficiency.” As a corporation, Airbus may be more willing to send work to less costly suppliers outside Europe, he added. “This is a move in the right direction.”

“We welcome the agreement of the Airbus partners,” Daimler-Benz Aerospace Chief Executive Manfred Bischoff said in a statement.

“Nevertheless, difficult negotiations about how to implement the conversion still have to be conducted.”

Including McDonnell Douglas’ share, Boeing now has close to a 70% share of the world jetliner market, compared with Airbus’ 30%. The European group has vowed to win 50% by 2000 or shortly thereafter.

In 1996, Airbus logged orders for 307 planes worth $20 billion--about three times its orders for 106 planes worth $7 billion in 1995.

If Airbus includes orders by the U.S. Air Force for 120 planes, announced in late 1996 but not yet signed as firm orders, the tally rises to 420 planes worth $25 billion--compared with 645 planes worth $47 billion for Boeing in 1996.

A spokesman for Aerospatiale said he did not know the details of the accord and could not offer further information. British Aerospace referred all calls to Airbus. Daimler-Benz Aerospace was shut for a holiday, and the parent company had no comment.