Dollar fall 'may make Airbus go bankrupt'
The collapse in the value of the dollar could send Airbus bankrupt, the European aircraft manufacturer has warned.
The stark alert from Airbus's Tom Enders has been immediately seen as a wake-up call for investors in British and European companies doing business with the US or in dollar-denominated industries, and will confirm the worst fears for thousands of job losses - potentially also in the UK - across Airbus.
"The dollar's rapid decline is life-threatening for Airbus," said Enders, the planemaker's chief executive, in a speech to Airbus workers in Hamburg, one of the group's main operating centres.
"The dollar exchange rate has gone beyond the pain barrier."
The problem for Airbus is that while much of its costs in Europe are in euros, it sells its aircraft in an industry which is priced in dollars.
What that means for a company like Airbus is a catastrophic wipeout of profit margins.
When, for instance, the Airbus A380 should have been launched two years ago, the $300 million retail price for the double-decker super jumbo would have brought in the equivalent of around £170 million into the coffers on Airbus.
But with the dollar falling to new lows against the European currencies again, that list price is now worth £145 million - a loss on the depreciation in the exchange rate of around 15% or £25 million per aircraft.
But Enders's warning was also seen as sabre-rattling by Airbus workers who know they are being softened up for huge redundancies because of the financial crisis at the company.
Delays in the A380 and in the giant A400M military aircraft have already wiped billions of euros off Airbus profits, and the company has already told its workforce that 10,000 jobs will have to go in a root-and-brach restructuring of working practices.
Enders told the workers in Hamburg that the time for "reasonable adjustments" at the manufacturer are now gone and that more radical measures will be needed.
"There will be no more taboos," said Enders.
That will send a chill among the 10,000 Airbus workers in Britain at Filton near Bristol and Broughton near Chester.
Those employees work in research & development and in the manufacture of Airbus wings.
The location of their jobs are a legacy of British government support for the Airbus project. That has effectively ended after a 20% stake in Airbus was handed to the defence group BAE Systems which has since sold the holding.
Insiders believe that if Enders is serious about radical cuts then outposts like Filton and Broughton could be among the first for the chop.
Menawhile, the greenback is heading for its biggest weekly decline versus the euro in a year and toward record lows since the 1999 debut of the European currency.
It also fell to below 108 yen for the first time since 2005.
Against the pound the dollar was trading at $2.069.
