EADS announced that the negotiations with Latecoere were over,

EADS announced that the negotiations with Latecoere were over, due to market conditions. The persisting weakness of the dollar, higher credit rates and hard-toobtain banking guarantees constantly cast doubts on the process, Les Echos comments. Like in Germany, the aerospace company will now create an independent subsidiary to bring together the 2 plants, and then sell it to investors, with a pure financial profile. Latecoere seemed to have a solid case to present, though, and beyond the financial issue, the influence of French unions may have played a role in the talk termination. Indeed, some unions’ representatives who chose to remain anonymous said EADS “had been forced to back away from the factory talks due to concerns that buyers faced difficulty funding the purchase during the credit crunch”. The French supplier actually denied any fundraising issue, citing “changes in the way Airbus wanted to proceed”. “We still are candidates […] in the conditions that were initially put forward”, Latecoere’s head of communication Jean- Pierre Robert said. Airbus did not make comments. Le Figaro quotes the small business perimeter of Latecoere as another reason for the Airbus decision. Latecoere has €500 M of revenue, and the purchase of the sites only was one side of the transaction with EADS. Latecoere had to invest in Meaulte and Saint-Nazaire to convert them into compositeoriented places, and to supply parts for the A350XW B. Yet, Les Echos states that EADS is now disconnecting the search for buyers from the A350 development process. In this light, Latecoere will be confirmed as prime supplier. French unions may be satisfied but they should not rejoice, since EADS remains determined to carry on divesting the sites. This is not a victory at all for unions, underlines Le Figaro: the divestment of the sites is an essential part of Zephyr, the cost cut plan, and the Financial Times assumes that this end of talks and the postponement of the sale will not alter the group’s target of saving €2.1 Bn by 2010. AFP, Reuters (06/05), DowJones Newswires, Les Echos, Financial Times, Le Figaro, la Tribune, Challenges