Airbus is pondering fundamental changes to the way it builds aircraft as part of ongoing restructuring efforts driven by a slide in the value of the dollar, the head of parent EADS said on Tuesday.

After losing 9 percent this year, the US currency is so weak that progressive cost-cutting is no longer enough and the planemaker, which combines the airliner capability of 4 European nations, is starting to rethink its 30-year-old business model.

"The Sword of Damocles is not just hanging over us any more; it is actually falling," EADS Chief Executive Louis Gallois said at a press breakfast in Paris on Tuesday.

To compensate for production delays and a weak dollar which helps rival Boeing, Airbus has already embarked on a program of factory sales and 10,000 job cuts.

But the plan has been hit by a further slump in the dollar and problems in selling some German factories.

Airbus is expected to bolster its Power8 restructuring plan with a new set of cost cuts some time in the second quarter, but their scope will depend in part on the euro exchange rate which the planemaker decides to build into its forecasts.

Airbus originally bet on a euro at USD$1.35 by 2011. It shifted this to USD$1.45 at the start of the year, implying EUR1 billion euros in further cost cuts to compete with Boeing. The euro now hovers below USD$1.60 but Gallois suggested Airbus saw no need to panic.

"If the euro stayed at USD$1.58 or USD$1.59, we would have to take that into account but we can't change our working scenario every time we wake up in the morning," Gallois said.

Gallois said that even USD$1.45 meant an increase of scale in the restructuring efforts, which are opposed by unions and which caused political fireworks in France and Germany last year.

Calling the euro's current level of USD$1.58 "unbearable" for some of Europe's biggest industries, Gallois said EADS would be forced to speed up efforts to change its traditional way of doing business by paying even its European suppliers in dollars.

As a result, French equipment maker Latecoere is being forced to move its own production out of the euro zone.

Next steps, Gallois said, will be to shift more production to low-cost countries or directly into the dollar zone.

"We are moving more to a global model from a territorial model. The drop in the dollar is accelerating this process."

Airbus unions however argue that production problems at Boeing, which has outsourced much of its new 787 Dreamliner across the globe, have thrown the outsourcing trend into doubt.

For about three decades, Airbus production methods reflected the jealously guarded national work quotas of its host nations, with planes built in different locations in an elaborate industrial jigsaw spanning France, Germany, Spain and Britain.

Now the planemaker is contemplating turning to assembly or sub-assembly outside Europe both to save money and to help penetrate foreign markets such as the United States and China.

EADS won a USD$35 billion deal to supply mid-air tankers based on Airbus planes to the US Air Force in February but will use the same Alabama production facility earmarked for the tankers to assemble some commercial freight aircraft more cheaply.

Airbus also plans an assembly line in China from 2009.

Critics such as Boeing say Airbus has been pampered for years by European governments and could actually benefit from the weakness of the dollar, since it would never have had mustered the support needed to eliminate waste without outside pressure.

But Gallois described how a cocktail of economic events had already undermined efforts to restructure the jetmaker, which lost money last year due to the weak dollar and costly delays to its A380 superjumbo, the world's largest airliner.

Negotiations to sell three German factories to Germany's MT Aerospace collapsed over financing problems stemming from the credit crisis and failure to agree over the dollar rate.

Gallois reiterated that EADS was sticking to its 2008 business forecasts despite the setback and would go ahead with plans to carve out the three plants into a separate company for which Airbus was still looking for potential buyers.