Exports Not Hurt by Euro's Strength, Official Says

BRUSSELS, April 15 -- Most European exporters are not yet feeling the pain of the strong euro, a European Union official said Tuesday -- even as aircraft maker Airbus, which sells its planes in U.S. dollars, called the level "unbearable."

Luxembourg's prime minister, Jean-Claude Juncker, who leads the monthly economy talks among the 15 nations that use the common currency, said he did not see the high euro hurting the European economy "for the time being."

The euro reached a record $1.5912 last week, which makes German cars and French champagne more expensive for American customers or forces exporters to squeeze their margins. But it has an upside for Europe because it helps ease inflation by reducing the cost of dollar-priced oil imports.

"For the time being, we don't have a too huge impact on the real economy," Juncker said, but he refused to say what level would hurt European exporters. "The export sector is developing quite well. The moment will come where the exchange rate level will start to cause serious harm to the European economy."

Record sales figures from Europe's biggest automaker, Volkswagen, show the trend. VW said Tuesday that it had its best-ever quarterly car sales in the first three months of this year, despite the dampening effect of the exchange rate. Sales to the United States fell slightly, but that was more than offset by surging demand in China and Brazil.

Trade figures from last year show that euro nations, which include France and Germany, experienced slight declines in sales to the United States and Japan last year but increased their exports to most other major trading partners.

But companies that rely on dollar-denominated sales -- such as Airbus -- are feeling considerably more pain. The strong euro is a "sword of Damocles" starting to fall on the company, said Louis Gallois, chief executive of Airbus's parent, European Aeronautic Defence and Space.

"We are at levels which are becoming unbearable," he said. He warned that the situation could force the company to shift more of its costs into dollars by moving production outside of the euro area and making acquisitions in dollar-based countries.

Gallois said he wants to transform EADS North America -- part of a consortium that triumphed over Boeing to win a $35 billion contract from the U.S. Air Force -- into an "enduring supplier to the Pentagon." That means meeting U.S. security requirements and gaining strength through acquisitions and investment in sites, he said.

Juncker said he was confident that U.S. officials realized that a strong dollar would be in the interest of the American economy. But the weakness of the dollar does make U.S. exports more attractive to other nations.

Juncker expressed the hope that currency traders were listening to the comments made by officials of the world's seven leading industrial nations at talks in Washington last weekend, and paying more attention to long-term economic trends rather than speculating on short-term data.

Associated Press writers Emma Vandore in Paris and Geir Moulson in Berlin contributed to this report.