EADS pledges talks on jobs to ensure merger goes ahead

Pressure is mounting on EADS boss Tom Enders and his BAE counterpart Ian King who, under UK takeover rules, have until October 10 to say whether they will press on with talks to create the world’s biggest defence and aerospace firm.

A string of potential stumbling blocks have emerged since the plan was announced last month, including conflicting political interests in Britain, France and Germany, as well as some shareholders’ dissatisfaction with the terms of the deal.

A key obstacle is Germany’s demand that it maintain as much influence in the new group as France. That would entail Berlin buying a stake in EADS currently owned by carmaker Daimler, possibly through the KfW state development bank.

Enders has insisted any state role must be kept to a minimum to ensure the new company remains competitive.

“I see no advantage for our country in buying a stake,” Mr Enders said, adding it would cost taxpayers billions without guaranteeing special rights.

“On export markets, especially in the United States and Asia, we would be at a competitive disadvantage if we were to give the impression of being a company directed by governments,” he added. However, Mr Enders also tried to soothe fears that German jobs may be lost, saying he was open to offering some guarantees.

“I am so convinced about our project that I am ready to talk about attractive job and site guarantees which I could not consider for EADS,” he said.

He argued a merged company offered the best opportunities for German jobs as it was the only way to secure orders from new markets, such as Asia.

“Either we cut jobs or we embrace new international markets,” Mr Enders added.

EADS employs about 50,000 people in Germany across 29 sites and German Chancellor Angela Merkel wants to avoid plant closures or major job losses just a year before an election.

Among the issues under discussion by politicians, executives and shareholders are the planned 60:40 merger ratio in favour of EADS and the location of the firm’s headquarters.