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Airbus OKs restructuring
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June 23, 2000: 10:28 a.m. ET
European jet maker to change legal status; presses ahead with 'super-jumbo'
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LONDON (CNNfn) - The four founders of Airbus Industrie announced a long-awaited corporate restructuring Friday and gave the go-ahead for the development of its new "super-jumbo" aircraft, in a twin-pronged bid to overtake rival Boeing Co. as the world's largest commercial jet maker.
Airbus, until now a consortium, will turn itself into a limited company, Airbus Integrated Co. (AIC), ending more than four years of wrangling over the appropriate corporate structure.
Analysts said the move would boost the planemaker's access to financial markets and support efforts to cut costs and improve efficiency. The partners said the move would cut  329 million a year from operating costs.
The new entity will be 80 percent owned by European Aeronautics, Defense and Space Co. (EADS), the company that will result from the merger of DaimlerChrysler Aerospace, Spain's Casa and France's Aérospatiale-Matra.
Britain's BAE Systems PLC will own the other 20 percent and appoint two members of the seven-strong AIC board, with veto rights over some management decisions.
Around 30 percent of EADS's stock will be sold in an initial public offering next month, with trading due to start on Jul. 10 in Paris, Frankfurt and Madrid.
Airbus Industrie had sales of $16.3 billion in 1999 and received orders valued at $30.7 billion. Analysts have valued the company at around $25 billion.
The four AIC partners gave no formal timescale for the formation of AIC, whose creation has been delayed by disputes over the valuation of the assets placed in the new firm. No valuation details were released, but the four agreed to place all their Airbus-related manufacturing and design assets into AIC.
A3XX designed to break Boeing monopoly
The issues of ownership and control had delayed the decision to go ahead with developing the 555-seater A3XX aircraft. Airbus said Wednesday its board had given formal approval for the new aircraft to be offered to potential customers.
Airbus aims to break the monopoly that Boeing's (BA: Research, Estimates) 747 jumbo has in the market for planes with over 300 seats.
The double-deck A3XX is expected to cost $12 billion to develop, and has provoked strong debate in the airline industry over whether such a huge plane is viable. Airbus said eight customers, including leasing firm International Lease Finance Co., Air France SA and Singapore Airlines have indicated their interest in buying the plane.
"The market has signaled loud and clear that it wants the A3XX, and this has been recognized by our shareholders, who all fully endorse the program," Airbus Industrie Chief Executive Noel Forgeard said in a statement.
Airbus sees a market for 1,200 aircraft with more than 400 seats over the next 15 years, while Boeing estimates demand at just a third of that level.
To resolve tensions over how the incorporated Airbus Integrated Co. would operate, the partners agreed that the A3XX would be assembled in Toulouse, France, before being flown to Hamburg in Germany where interior furnishings will be added.
Aérospatiale-Matra (PARO) shares were down 2.1 percent at 22.9 in mid-afternoon trade in Paris while BAE (BA-) gained 3.2 percent to 430.75 pence. Shares of Dasa's parent DaimlerChrysler AG (FDCX) were fractionally ahead at 55.70. 
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