Germany set aside more funds to build a bigger stake in European Aeronautic, Defence & Space Co. that would create parity with France as it seeks to boost the German work-share on Airbus SAS aircraft.
The government reserved an additional 600 million euros ($800 million) to finance the purchase of a stake held by a group that includes private lenders, insurers and state-owned federal banks, according to a supplementary budget draft. The state already set aside 1 billion euros for a 7.5 percent now held by Daimler AG (DAI), which it agreed to buy last year.
EADS management has opposed greater involvement by states, saying government meddling doesn’t reflect the company’s way of doing business. Germany has demanded that EADS guard a greater balance between France on Germany on work toward aircraft programs, a request that EADS Chief Executive Officer Louis Gallois this month called “not appropriate.”
Raising the German stake in EADS to 15 percent would mean that a third of the company is state-owned, given France’s 15 percent holding and Spain’s 5.4 percent stake. Germany already owns 3 percent of EADS via a state-owned bank which participated with other banks and German states to buy 7.5 percent stake from Daimler back in 2007.
That consortium, known as the Dedalus group, has agreed to hold the shares until 2013 after already extending their commitment once. According to the German government’s budget draft, the Dedalus’s group’s desire to decrease its holding prompted the government to increase its reserves for a purchase.
EADS CEO designate Tom Enders has called Germany’s plan for a larger stake in EADS a step in the “completely wrong direction.” Enders now runs Airbus and will take over in June.
Germany’s government has been at odds with EADS management ever since the bulk of engineering and design work on the new A350 wide-body aircraft was concentrated in Toulouse, France, where Airbus is based. That left the main German site in Hamburg with the role of a producer.
German state’s aviation coordinator, Peter Hintze, has said the government may reconsider development funding for new planes unless the company heeded Germany’s call for more work. Enders’s plan to move EADS’s headquarters to Toulouse from a shared base in Paris and Munich has further deepened the rift.
EADS spokesman Sascha Reinhardt today said the company had no comment on shareholder plans, and a spokesman for Enders at Airbus also declined to comment. Daimler, the maker of Mercedes- Benz luxury cars, also declined to comment.
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