Report: Ford preparing to sell Volvo in deal that could be worth up to $8 billion

July 15th, 2007

LONDON: Ford Motor Co. is preparing to sell Volvo, a British newspaper reported Sunday.

The Sunday Times, citing unnamed sources in London, said the decision to sell Volvo, which is part of Fords Premier Automotive Group, was made in the past two weeks, but that the timing of the sale had yet to be decided.

No bank had been appointed to handle the transaction, the newspaper said, adding the deal could be worth 3.9 billion pounds (US$8 billion; \5.8 billion).

Messages seeking comment on the report were left Sunday with Ford spokesmen.

Ford acquired Volvo from Swedens Volvo AB in 1999 for US$6.45 billion.

Last month, Ford said it was reviewing its position on Jaguar and Land Rover, fueling speculation that company was getting closer to selling the fellow Premier Automotive Group brands.

Ford sold Aston Martin, another part of the Premier Automotive Group, for US$848 million in March, with some analysts saying the luxury brand did not fit into Fords long-term survival plan. That plan includes cost savings by developing multiple models worldwide on the same underpinnings.

The possible sale of Volvo comes as the company is struggling to return to profitability in the face of fierce competition from Asian automakers and developing tastes for more fuel-efficient models in its key North American market. It is slashing thousands of jobs and plans to close plants to cut costs.

Dearborn, Michigan-based Ford posted a narrower loss of US$282 million for the first quarter. The Premier Automotive Group reported a record pretax profit of US$402 million for the quarter, due largely to Volvo.

And Ford has been relying on Volvo, an analyst has said, as it tries to globalize its engineering, design and manufacturing systems.

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Sarkozy-Merkel summit aims to simplify EADS management, helping Airbus

July 15th, 2007

PARIS: Ailing planemaker Airbus is about to get a visit from Mr. Fix-it Д new French President Nicolas Sarkozy Д who together with his German counterpart wants to simplify how decisions are made at parent company EADS.

Sarkozy Д who just two months into the job has unveiled ambitious plans to fix Europe, the French economy, its ailing university system and more besides Д now has Airbus in his sights. He has invited German Chancellor Angela Merkel to Airbus headquarters in Toulouse on Monday to seek a solution to EADS cumbersome dual management structure.

The unusual structure of European Aeronautic Defence Space Co., run jointly by French and German management, was cited in a report by the French Senate last month as a major reason for Airbus troubles.

In an interview with the German daily Handelsblatt, released on Sunday, Merkel insisted that politics must not play a role in the decision-making process at EADS.

“Its important that the company be run according to corporate, and not political, principles,” Handelsblatt quoted Merkel as saying.

EADS has been tarnished by a series of mishaps over the past two years at Airbus, with delays to the A380 superjumbo and a revamp of the A350 coming amid revelations of management errors, technical woes and huge severance payments for departing executives.

Top executives have been ousted and a massive restructuring plan will result in 10,000 job cuts over four years. The setbacks have cost the company billions of euros in profits and saddled Airbus with its first-ever operating loss last year.

Still, Merkel insisted “Airbus remains a success story.”

The German chancellor said, however, that important decisions on how the company would be run had to be made now, in order to ensure its success in the future.

Earlier this week, French and German officials said that EADS shareholders are nearing a deal to end the dual management system Д with a German likely to become sole CEO with a French person as sole chairman.

Both Sarkozy and Merkel have said maintaining a Franco-German balance at EADS is imperative.

The French government owns 15 percent of EADS, and French conglomerate Lagardere Groupe SCA holds 7.5 percent. The German government holds no direct stake, but Stuttgart, Germany-based DaimlerChrysler and German banks hold 22.5 percent.

Arnaud Lagardere, head of the group that bears his name, is said to be keen to remain chairman. If so, Frenchman Louis Gallois would likely have to give up his role as chief executive, leaving the role to German Thomas Enders. Gallois could stay on as head of Airbus, overseeing the restructuring plan.

Lagardere said shareholders hope to reach agreement before Monday, though there is no certainty of a deal.

Analysts said the main task for Sarkozy and Merkel will be showing they can rise above partisan interests.

“Frankly, if national issues cannot take a back seat in the current state of EADS and Airbus, then there is no hope for multinational companies with government involvement,” said Sandy Morris, an analyst at ABN Amro in London.

“The last time there was interference, it came from the French,” he said, referring to a power struggle between former French EADS executives Noel Forgeard and Philippe Camus. “The Germans are right to be wary.”

Competition between former Forgeard and Camus distracted them from difficulties with the A380, the Senate report said.

Forgeard replaced Camus as co-chief executive of EADS in 2005 Д then was ousted in 2006 with a \8.5 million (US$11.71 million) severance package.

EADS has other pressing issues to sort out. The delayed A380 is due to be shipped to its first customer, Singapore Airlines Ltd., in October, and the financing of the midsize, long-range A350 XWB, subject of a costly redesign, need to be finalized.

The implementation of the restructuring program also needs attention. Gallois has said the plans, which aim for annual cost savings of \2 billion (US$2.76 billion), need speeding up.

A raft of orders announced at the Paris air show last month has irked unions, who are questioning the need for job cuts and the sale of factories. Workers at three Airbus plants in Germany held protests Thursday against the possible sale of two of the facilities.

Currency issues will also be on the agenda, Sarkozys office said. His criticism of the European Central Banks monetary policy has irked Berlin, for which independence of the ECB was a criteria for joining the common currency.

“Consequently, there is no room for maneuvering on this point,” Handelsblatt cites Merkel as saying.

Marine: Beating of Iraqis Became Routine

July 15th, 2007

Marine: Beating of Iraqis Became Routine Marine Testifies That Beating Iraqis Was Routine After Order to ‘Crank Up the Violence Level’ The Associated Press

CAMP PENDLETON, Calif.

A Marine corporal testifying in a court-martial said Marines in his unit began routinely beating Iraqis after officers ordered them to “crank up the violence level.”

Cpl. Saul H. Lopezromo testified Saturday at the murder trial of Cpl. Trent D. Thomas.

“We were told to crank up the violence level,” said Lopezromo, testifying for the defense.

When a juror asked for further explanation, Lopezromo said: “We beat people, sir.”

Within weeks of allegedly being scolded, seven Marines and a Navy corpsman went out late one night to find and kill a suspected insurgent in the village of Hamandiya near the Abu Ghraib prison. The Marines and corpsman were from 2nd Platoon, Kilo Company, 3rd Battalion, 5th Regiment.

Lopezromo said the suspected insurgent was known to his neighbors as the “prince of jihad,” and had been arrested several times and later released by the Iraqi legal system.

Unable to find him, the Marines and corpsman dragged another man from his house, fatally shot him, and then planted an AK-47 assault rifle near the body to make it appear he had been killed in a shootout, according to court testimony.

Four Marines and the corpsman, initially charged with murder in the April 2006 killing, have pleaded guilty to reduced charges and been given jail sentences ranging from 10 months to eight years. Thomas, 25, from St. Louis, pleaded guilty but withdrew his plea and is the first defendant to go to court-martial.

Lopezromo, who was not part of the squad on its late-night mission, said he saw nothing wrong with what Thomas did.

“I don’t see it as an execution, sir,” he told the judge. “I see it as killing the enemy.”

He said Marines consider all Iraqi men part of the insurgency.

Lopezromo and two other Marines were charged in August with assaulting an Iraqi two weeks before the killing that led to charges against Thomas and the others. Charges against all three were later dropped.

Thomas’ attorneys have said he suffers from post-traumatic stress disorder and traumatic brain injury from his combat duty in Fallouja in 2004. They have argued that Thomas believed he was following a lawful order to get tougher with suspected insurgents.

Prosecution witnesses testified that Thomas shot the 52-year-old man at point-blank range after he had already been shot by other Marines and was lying on the ground.

Lopezromo said a procedure called “dead-checking” was routine. If Marines entered a house where a man was wounded, instead of checking to see whether he needed medical aid, they shot him to make sure he was dead, he testified.

“If somebody is worth shooting once, they’re worth shooting twice,” he said.

The jury is composed of three officers and six enlisted personnel, all of whom have served in Iraq. The trial was set to resume Monday.