French Prime Minister Dominique de Villepin drew back on Wednesday from a head-on clash with Germany over Airbus, while leaning on its industrial partners to deal with a crisis over its delayed A380 project.
Apologizing for causing uproar in parliament during a heated debate over Airbus parent EADS on Tuesday, Villepin said urgent action was needed on A380 superjumbo delays but declined a chance to clarify his doubts over an EADS shareholder pact.
"The government is determined to take all necessary steps to ensure EADS resolves its production delays and supplies its clients in the best manner," Villepin told parliament.
"There are urgent decisions to take. They will be taken. (Finance Minister) Thierry Breton is preparing them in liaison with our French and European partners in the company," he said.
EADS and Airbus are reeling after fresh delays in Airbus A380 superjumbo deliveries triggered an EADS profit warning and a 26 percent drop in its shares last week.
Stung by Socialist opposition claims that his government has done nothing to help with the A380, Villepin vowed on Tuesday to revise a Franco-German pact that prevents the French state from interfering in Airbus.
His remarks were virtually drowned out by calls for his resignation in a suspended session of parliament, but created waves across Europe's aerospace industry because of fears that finger-pointing over the A380 delays could destabilize EADS.
"The German government has a vital interest that the balance between Germans and French (interests at EADS) will not come under pressure," a German government source said.
German Economy Minister Michael Glos said the Airbus problem was an industrial one needing industrial solutions.
The French government has been traumatized by the Airbus affair, which coincided with a major retreat on energy plans.
"I'm very concerned about what is going on and in particular what is going on at the industrial level," Trade Minister Christine Lagarde said.
France's Breton told parliament on Tuesday that he and Arnaud Lagardere, whose media company owns 7.5 percent of EADS, had discussed possible changes to the ownership structure and how Airbus is managed.
But the wider implications of another shareholder struggle returned to haunt EADS on Wednesday.
A source close to the matter said France's government would not rush to change the shareholder pact. Instead, it aimed to persuade EADS' industrial shareholders, DaimlerChrysler and Lagardere, to take operational measures and improve the flow of information in EADS, the source said, asking not to be named.
French officials said the genesis of the decision to look again at the six-year-old shareholder agreement was the sale of BAE Systems' stake in Airbus, rather than the current A380 crisis.
The pact enshrines conditions on autonomy laid down by DaimlerChrysler, the largest German shareholder, when EADS was created in 2000. While the French state has a strategic role, it cannot interfere in operational management.
Villepin's remarks reflect the government's fury that it was not warned in advance of Airbus problems and that its hands are tied while opponents exploit an opportunity to maximize its embarrassment following a climb-down on gas privatization.
"We need to use the withdrawal of BAE Systems to take things in hand," said Guy Tessier, chairman of a parliamentary defense commission and an ally of President Jacques Chirac.
"The dialogue with the Germans has greatly moved on. I think the Germans have the same interest as us in restoring order. What's needed today is to put the company back on the rails even if it's true that the Germans will not appreciate the intervention of the (French) state one little bit."
Industry observers see little for the German side to gain by intervening publicly since the French side looks to be imploding by itself and Forgeard's future hangs by a thread.
However, Berlin has signaled repeatedly that it will not readily agree to any attempt to tilt EADS towards the French.
Forgeard angered the Germans by seeking sole executive power in 2004 and fostering an abortive takeover of a French defense company that would have shifted power towards Paris.
Support for Forgeard has also wobbled in France, even among Chirac loyalists who previously backed his former aide. Asked if the government still had confidence in EADS, government spokesman and Budget Minister Jean-Francois Cope told Europe 1 radio on Wednesday: "I can't tell you yes or no."
While Chirac backed EADS management last week, his Gaullist protege Villepin, whose own support is at a near-record low, has not recently come out in support of Forgeard by name.
