Post failed merger, new battle grips Airbus

Nov 14 2012, 03:00 IST
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SummaryOn a cloudy day in southwest France last month a frail 91-year-old Frenchman in a white shirt and white tie took the stage in front of 1,000 Airbus workers and VIPs and delivered a subtle warning.

On a cloudy day in southwest France last month a frail 91-year-old Frenchman in a white shirt and white tie took the stage in front of 1,000 Airbus workers and VIPs and delivered a subtle warning.

Known as the ‘Father of Airbus’, co-founder Roger Beteille reminded his audience, gathered in a vast new plane factory in Toulouse, how an industry once “devoted to destruction” had become a symbol of European unity in the decades after World War II.

Only by “working hard together, hand in hand”, Beteille said, had the European firm’s employees realised their dream to create “the largest and best airliner manufacturer in the world”.

The meaning of the revered engineer’s message to Europe’s feuding politicians and industry barons was plain: Cooperate with each other or lose what you have built.

Just two weeks before the ceremony — to mark the start of production of the new Airbus A350 jet — talks between France, Germany and Britain to create a European aerospace and defence giant bigger than Boeing had collapsed in acrimony. German Chancellor Angela Merkel, Europe’s most powerful leader, had refused to back the $45-billion merger between Airbus parent EADS and British defence group BAE Systems, effectively dooming the deal.

Top officials in the German government deflected blame, alleging discord between Paris and London over the size of the French government’s stake in the combined group. But two confidential sets of demands sent by the German government before and during the talks and described to Reuters, as well as conversations with senior officials in Germany and France, confirm that the roots of the failure lay far deeper.

The mega-deal fell apart because of Berlin’s growing resentment of what it saw as its loss of influence within EADS, wariness about France — sometime rival, sometime partner — and suspicion about the motives of the firm’s German CEO Tom Enders.

“We already have an imbalance on technology within EADS, to the benefit of the French. We didn’t want to make this situation even worse by hooking up with BAE,” a senior German official said.

For Enders, who in the months before the BAE talks had come under acute pressure from Berlin to move prized Airbus research work to Germany from France, the proposed deal with BAE was a last-ditch attempt to free EADS from the yoke of government influence.

The deal’s failure is likely to bring the opposite result. Germany, emboldened by its growing stature in Europe, looks

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