Good News For Boeing.

According to Bloomberg, Airbus SAS may cut its 2 billion- euro ($3 billion) research budget to trim costs as the dollar's decline becomes ``life threatening'' for the world's largest planemaker, Chief Executive Officer Tom Enders said.

The dollar-euro rate has ``passed the pain barrier,'' Enders told Airbus works-council representatives in Hamburg, Germany, yesterday. Unions said today that with record orders secured this year the comments were ``absolute nonsense.''

Airbus prices planes in dollars, reducing the value of sales when converted into the European currency. The company also incurs the bulk of expenses in euros, leaving little room to combat the impact of fluctuating rates. Airbus parent European Aeronautic, Defence & Space Co. said Nov. 8 that the dollar's slump required 1 billion euros ($1.48 billion) in annual savings beyond the 2.1 billion euros already planned.

``The dollar has gone down even further since that was announced and the pace of the decline has increased,'' Airbus spokesman Rainer Ohler said today by telephone. ``This poses a threat to the Airbus business model. We have to consider measures to control spending, and one of our largest budgets is R&D, so it's obviously under consideration.''

EADS shares fell 41 cents, or 1.9 percent, to 20.89 euros and were trading at 21.05 euros as of 1:34 p.m. in Paris. They've fallen 19 percent this year, reducing the company's market value to 17.1 billion euros. Boeing Co., the second biggest maker of commercial aircraft, has lost 1.6 percent.

The dollar has declined 12 percent against the euro so far this year and today fell to as low as $1.4967 per euro, the lowest since the European currency's debut in 1999.

Strong Unions

``I think it's tough for them to adapt to these changes,'' said Nick Fothergill, head of industrial sales and trading at Lehman Brothers in London. ``In France and Germany there are very strong workers and unions, but now is the opportunity, particularly with this currency differential.''

Airbus is cutting 10,000 jobs after it lost 572 million euros last year before interest and tax, compared with Boeing's profit of $3.81 billion. Wiring problems put the A380 superjumbo two years behind schedule at a cost of $6.8 billion, the A400M military-transport is running a year late, prompting a 1.1 billion-euro charge, and the A350 widebody was redesigned five times to win airline approval, pushing deliveries five years behind Boeing's rival 787 Dreamliner.

Assumed Rate

The job cuts Airbus is seeking through 2010 are part of a restructuring plan aimed at making the company profitable and competitive. The so-called Power8 program assumes an exchange rate of $1.35 to the euro, Ohler said today.

Still, Airbus has already won record orders this year and EADS this month reported a smaller-than-expected loss after aircraft pricing was firmer than anticipated.

``You can't talk about a life-threatening situation,'' said Daniel Friedrich, a spokesman for Germany's IG Metall union. ``That is absolute nonsense. We have a flourishing aviation market that gives us new orders all the time. We have capacity utilization for six or seven years.''

Friedrich said Airbus needs to review its discounting policy if it can't make a profit given current demand and that Enders must be explicit about what measures are planned or risk destabilizing the workforce.

``It's not enough to just make headlines,'' he said. ``This is causing uncertainty among the workers. You can't nurse this company back to health with spending cuts. And we can't outsource production to dollar regions. Then you would have to say that planemaking in Europe, in Germany, is dead.''

A350 Funding Safe

Spending on the A350, Airbus's newest model, is not under threat, Ohler said. The long-haul plane is doing ``extremely well'' in winning orders and the program continues as planned, he said. Neither did Enders mention further job cuts, the spokesman said, with the planemaker actually adding production workers to help accelerate output of A320-family short-haul planes and of the A380.

The spokesman said reports that Airbus may retreat from a plan to sell six factories to third parties is ``rubbish'' and that ``no decisions have been taken.'' Germany's Sueddeutsche Zeitung newspaper said today that the sale process may be stopped, without citing anybody.