French Unions Conditionally Back Airbus U.S. Move

Union officials said the move could actually help Airbus by relieving pressure on clogged production lines in Europe.

French unions issued conditional backing on Monday to proposals by Airbus to assemble the freight version of the A330 in the United States if it wins a contract to provide refueling planes to the Pentagon.

Airbus parent EADS earlier sweetened its bid for a $40 billion U.S. Air Force refueling contract by offering to assemble the commercial freighter version of the A330 in Mobile, Alabama, alongside a sister aircraft to be used for the tankers.

The A330-200F freighter was launched last year to fill a mid-sized niche in the air cargo market and is being assembled in Toulouse, France, alongside the core passenger version of the A330, a wide-bodied twinjet.

In Toulouse, French union officials embraced the proposals on condition they did not lead to more jobs or aircraft programmes being transferred outside Europe.

Unions have expressed concerns about recent Airbus warnings that work could be transferred on a large scale to the dollar zone to cope with a fall in the U.S. currency's value.

"We are for this (freighter) idea in principle if it allows us to win new markets," said Jean-Francois Knepper, the senior Airbus delegate with France's Force Ouvriere union.

"The production line which remains in Toulouse will be able to absorb surpluses in production. But there is no question of moving other aircraft types," he told Reuters.

Union officials said the move could actually help Airbus by relieving pressure on clogged production lines in Europe.

Airbus is struggling to complete the A400M heavy airlifter, already delayed by six to 12 months, and is under pressure to boost output of the A380 superjumbo to 13 this year from one last year while gearing up for its next model, the long-range A350.

Deliveries of the A380 have been delayed on average by two years due to wiring installation difficulties.

"This project ... could suit us if we are absolutely certain we won't lose jobs here. We will be very vigilant," said Marine Lensky of the CFTC union branch in Toulouse.

"WIN-WIN"

EADS North American Chief Executive Ralph Crosby said the freighter work to be carried out in Alabama would only involve final assembly, not production of aircraft sections and parts.

If it helps EADS win the tanker deal, he told Reuters, "the net gain is significant. It's a win-win for everyone."

Under the proposal, EADS would transfer assembly of a backlog worth some $11.6 billion at list prices to Alabama from Toulouse. The planemaker says assembly typically represents about 4-6 percent of the overall value of an aircraft.

Airbus has sold 66 of the A330 freighters, according to the latest available order tally at the end of November, but has so far not delivered any of the planes, which sell for $175.4 million each.

Crosby said if EADS and joint bidding partner Northrop Grumman Corp won the tanker order, and began assembling tankers and freighters in Alabama, all freighters would be assembled there.

But he said work on other non-U.S. tankers would continue in Toulouse and Madrid. EADS this month reported an order for three freighter planes for Saudi Arabia.

EADS and Northrop are competing against Boeing Co.

Crosby said EADS had not set a specific target for the U.S. content of the freighter, but noted EADS CEO Louis Gallois has spoken about increasing sourcing in the dollar zone.

The U.S. tanker would have U.S. content of 56 percent to 60 percent, and over time, the freighter's percentage would likely increase as more and more suppliers migrated to Alabama, Crosby said.

"We're going to do what's most efficient in that regard."