Airbus to split 10,000 job cuts with contractors

PARIS (Reuters) - Planemaker Airbus will announce on Wednesday plans to axe 10,000 jobs in four European countries, but will force contractors to share the pain of cuts which could provoke labor unrest, industry sources said.

The plans, which had provoked a split between France and Germany over the distribution of job losses, are part of a restructuring deal discussed last Friday by German and French leaders, who agreed to share both job losses and new technology.

By making contractors share the pain of job cuts, the European planemaker could limit the impact on its own workforce to some 5,000 jobs or 9 percent of its 55,000 staff. The other half would fall outside Airbus, the sources said.

Most of the 10,000 jobs at stake are in France and Germany, the two nations where most Airbus production is based and whose representatives divide up power in parent company EADS .

Jobs in Britain and Spain are also under threat.

Airbus is also expected to heed calls from political figures including French Prime Minister Dominique de Villepin to avoid forced sackings with French elections looming in April and May.

"There will be 10,000 job cuts including half from Airbus and half from the outside contractors," an industry source told Reuters, asking not to be identified. Airbus declined comment.

Unions have threatened strikes over the cutbacks, which are also expected to involve the sale of up to a quarter of its 16 factories to Airbus suppliers and partnerships for some others.

"We totally oppose the closure of any site and we won't accept any firings," said European Metalworkers Federation head Peter Scherrer after a gathering of Airbus unions on Tuesday.

One factory at Meaulte, northern France, halted production 24 hours ahead of labor talks on Wednesday, unions said. It is one of 3 plants apparently slated for partnerships, including Filton in Britain and Nordenham in Germany, the sources said.

The restructuring follows a dramatic decline in Airbus's fortunes in the past year when rival Boeing restored its lead in global aircraft sales for the first time since 2000.

A two-year delivery delay on Airbus's A380 superjumbo damaged European pride and cost EADS 5 billion euros ($6.6 billion). The crisis was compounded by strategy errors on its next model, the A350, and a weak dollar that boosted Boeing.

Airbus plans to brief unions on Wednesday at its Toulouse headquarters followed by a news conference at 1400 GMT.

CORE JOBS

Observers predicted the planemaker, run by savvy former French railways boss Louis Gallois, would make a maximum effort to ease the headline impact of the cost cuts by balancing the effects between "core" Airbus jobs and outside contractors.

While Airbus has 55,000 people on its payroll its 16 European factories include thousands of other workers employed by outside companies but who work full-time on Airbus premises.

It was less easy to predict where the axe would fall between Airbus's factories despite an agreement between France and German leaders that the pain should be spread fairly.

Airbus is aiming to sell factories, rather than close them, in order to overhaul its production methods for future models and cut costs while continuing to meet its record order backlog.

Most reports insist two plants in France and two in Germany will be sold. But the fact that more of the Airbus factories are in Germany has put pressure on Berlin to accept a higher proportion of plant sales if the jobs are split roughly evenly.

Britain is expected to keep its overall 20 percent share of work including wings on the A350, despite recently severed share ties with BAE Systems. Analysts say supplier GKN is a likely suitor for a partnership with Airbus's 6,000-strong Filton site.

At the heart of a compromise floated during a rupture in negotiations last week is a Franco-German trade-off balancing new technology against hard cash from its top-selling plane.

France will assemble the A350 in Toulouse, reaping benefits from new materials, and the popular single-aisle A320 will be transferred from Toulouse to Hamburg, a union official said.

Germany had held out for some A350 assembly, but may have achieved the solution it wanted -- A320 jobs may be a safer bet if the larger A350, already trailing Boeing by 5 years, fails to catch up with the U.S. jetmaker's hot-selling 787 Dreamliner.

French and German ministers put a positive spin on the restructuring plans on Tuesday, saying EADS shareholders had agreed on a balanced formula after weeks of damaging tensions.

But the cuts are seen as a blow for the French government, which reported a pause in recent unemployment declines in January, and for German efforts to preserve an upturn in growth.

The French government owns 15 percent of EADS and is part of a pact with French and German industrial shareholders. Although private, they are widely seen as national champions.

(Additional reporting by Kerstin Doerr, Nicolas Fichot and Jason Neely