Airbus to hive off components facilities in cost-cutting exercise

Beleaguered commercial aircraft manufacturer Airbus Industrie is planning a massive cost cutting exercise called the Power 8 programme, by allowing leading private aerospace suppliers to take over some of its manufacturing facilities in Germany, France and the UK. Sources indicate that six of Airbus's 17 European sites are on the block, as the once mighty aircraft maker, which hit a severe financial air pocket earlier this year, struggles to cut its costs and to cushion the risk of future aircraft programmes. Investment bank Merrill Lynch is advising Airbus on the sell-off.

Airbus will have to select its new partners carefully, as they will supply critical parts of the new A350 next-generation long-haul passenger jet being developed by Airbus to rival the Boeing 787 Dreamliner. A-350 is to enter commercial service in 2013. Little wonder that Airbus is in a hurry; it hopes to select the favoured bidders for exclusive negotiations for each site by September. Most of the bidders will be looking forward to the prospect of winning contracts for the A350, which if successful, will offer business for several decades to come.

Among the facilities it seeks to farm out is a site at Filton, near Bristol, in the UK, one site at Nordenham and another at Varel, both in Germany, and at Méaulte and Saint Nazaire-Ville in France. That the company is also selling its Laupheim cabin interiors site in Germany, shows how serious it is about the cost cutting exercise. If possible, the company wants to club the two sites in France and sell them to a single bidder, and do the same in Germany.

Potential bidders include Spirit AeroSystems of the US for the Filton, Nordenham and Méaulte sites. GKN of the UK is also likely to bid for the Filton operation, Germany's MT Aerospace - part of the OHB Technology group - for Nordenham, and leading French aerospace supplier Latécoère for Méaulte. Others interested include Sweden's Saab and Stork of the Netherlands, but they are not considered frontrunners. GKN and Spirit Aero Systems have already taken over components sites from Boeing and BAE Systems earlier.

Spirit, formed in 2005 when Canadian investment group Onex acquired Boeing's commercial aerospace component manufacturing operations at Wichita, Kansas, is now the world's largest supplier of commercial aircraft assemblies and components. Last year, it acquired BAE's aerostructures operation at Prestwick, Scotland. Spirit supplies the carbon fibre composite forward fuselage section, including the cockpit, for the Boeing 787 Dreamliner. It specialises in structural components for fuselage, wing and propulsion systems. Out of its $4 billion sales this year, Boeing accounts for more than 85 per cent and Airbus for only 10 per cent.

GKN of the UK will bid for the Airbus manufacturing facilities at Filton, where Airbus has its wing design and engineering operations, including the wing assembly for the A400M military transport aircraft, and work packages for composite wing components for the A350. It has a proven track record in taking over from aircraft makers, following its acquisition of a Boeing components manufacturing site in St Louis supplying mainly Boeing military aircraft. It already supplies composite wing parts to Airbus for the A400M.