Feb. 19 (Bloomberg) -- European Aeronautic, Defence & Space Co. halted plans to reorganize its Airbus SAS unit after French and German executives on the board disagreed about distribution of work on a new widebody airliner.

Airbus, the world's biggest planemaker, postponed an announcement scheduled for tomorrow about cost and job cuts. EADS's board ``interrupted' work on the proposal late yesterday after failing to agree on ``cross-national sharing'' of the workload on the A350 XWB, Airbus said today in a statement.

The company plans to slash 2.1 billion euros ($2.8 billion) in annual expenses by 2010 to help pay for the development of the A350, which will compete with Boeing Co.'s 787 Dreamliner. Airbus is short of cash because of 4.8 billion euros in losses on the A380 superjumbo jet. Delays on the A380 were caused by German and French developers using different design software.

``All parties involved need to realize the huge risk here,'' said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia-based consulting company. ``Failure is in fact an option.''

Airbus now assembles all widebody planes in Toulouse, France, and work is split in assembling single-aisle planes between Toulouse and Hamburg, Germany. The A320 plane, a 150- seat, mid-range plane, is built in Toulouse while the derivative A318, A319, and A321 planes are all assembled in Hamburg.

Cabin interiors on all the planes are done in Hamburg. EADS has been looking at ways to cut costs by focusing widebody production in France and single-aisle planes in Germany.

French Proposals

``I made proposals which I deem balanced, both from an industrial and a technological point of view, and which serve our objective of economic competitiveness,'' Louis Gallois, the Airbus chief executive officer and the French Co-CEO of EADS, said in the statement. ``I wish that they can lead to the consensus we urgently need.''

Tom Enders, the German Co-CEO of EADS, said in a separate statement that the board would take its time in approving the cost-cutting program, known as Power 8.

``We'll take the time necessary to get the best solution for our shareholders and our employees,'' said Enders today.

``The company must take responsibility for itself,'' and ``excessive interference'' would be ``counterproductive,'' French Finance Minister Thierry Breton said in an interview broadcast on i-Tele today. ``I'm keeping a close eye to make sure the plan is balanced,'' he said.

Currency Costs

The plan aims to cut the number of subcontractors and also move work to dollar-zone areas so that Airbus's costs are in the same currency as its sales, the dollar. The value of the dollar has declined 40 percent against the euro since 2000.

The German government on Feb. 12 said that cost-saving steps might affect people within Airbus as well as workers at parts suppliers. Economy Minister Michael Glos met last week with Gallois to discuss the plan and express the determination that jobs be protected at Airbus's seven German sites and at suppliers.

``Apparently the Germans want more work on the A350, but this flies in the face of everything Airbus wants to do in rationalizing production,'' said Olivier Esnou, an analyst at Exane BNP Paribas in Paris who has an ``underperform'' rating on EADS shares. ``It's just not coherent.''

Germany's main role now in building widebody planes is contribution of fuselage shells from plants in Bremen, Nordenham, Varel and Hamburg. German plants also contribute landing flaps and systems for wings, though German engineers have been eager to get more complex work.

Equal Sharing

``We should have an equal sharing out as far as possible,'' said Glos at a regularly scheduled news conference in Brussels today. ``In Germany, to a large extent, we're talking about technologies of the future.''

Glos in early February told German newspaper Bild am Sonntag that Germany would ``review'' its orders for military goods from EADS should significant parts of Airbus's production be moved from Germany to France.

``Given the new technologies that are going to be used on the A350, and the extensive use of composite materials, it's clear that German wants to ensure that its aerospace industry plays a full part in exploiting those,'' said Doug McVitie, managing director of Arran Aerospace, a Dinan, France-based consulting company.

Holdings

Germany doesn't directly own shares in EADS, whereas France owns 15 percent. Holdings in EADS are evenly balanced between the two countries. When the company was created in July 2000, Stuttgart-based DaimlerChrysler AG owned 30 percent, the French state 15 percent; and Lagardere SCA, a French media company, 15 percent.

Ownership of EADS has evolved in the last year. Lagardere and DaimlerChrysler each sold 7.5 percent stakes last April to banks and other financial institutions.

When DaimlerChrysler sought to sell a third of its remaining 22.5 percent stake in EADS in recent months, the government urged German banks and states to purchase the shares. On Feb. 9 a group a of German banks and regional governments paid 1.5 billion euros for 7.5 percent of EADS.

To contact the reporter on this story: Andrea Rothman in Toulouse, France at aerothman@bloomberg.net

Last Updated: February 19, 2007 14:46 EST