Press: France blocks $4bn funding for A350

The French government has blocked a proposal by managers of European Aeronautic Defense & Space Co. NV to raise up to $4 billion this year to help finance the Airbus jet A350-XWB.This is according to people with knowledge of the situation, highlighting the divisions between private- and public-sector shareholders over the group’s long-term strategy, according to the International Herald Tribune’s Web site on Tuesday.

EADS managers raised the possibility of a capital increase in January, citing the anticipated EUR10 billion ($13.36 billion) in research and development costs for the A350, as well as expenses linked to a major restructuring of Airbus. according to the IHT. The board was expected to request authorization for such a transaction at its annual shareholders’ meeting May 4, but agenda documents for the meeting published Tuesday make no mention of the plan, the IHT said.

The EADS co-chief executives, Louis Gallois and Thomas Enders, had proposed seeking approval of a sale of up to EUR3 billion in bonds that would be convertible into EADS shares after about five years, a person with knowledge of the discussions said last week, the newspaper writes.

The EADS board also failed to agree on whether to propose a dividend for 2006, according to the IHT.