Airbus Success Overshadows EADS Military Business

 - January 20, 2012, 10:35 AM
EAD's soon-to-retire president and CEO, Louis Gallois.

EADS’s goal of maintaining equal revenues at its civil and military businesses continues to be compromised by the stellar success of its Airbus division. The European group’s soon-to-retire president and CEO, Louis Gallois, acknowledged as much on January 17 at the EADS New Year Press Conference in Hamburg, Germany.

Gallois also conceded that the EADS Cassidian defense division will be further squeezed by the budgetary constraints of debt-laden European governments. In the unexplained absence of Cassidian CEO Stefan Zoller, it was left to Gallois to explain that EADS intends to compensate for declining “domestic” defense spending  by expanding its presence in emerging markets and in the U.S., where last year it was unsuccessful in the contest to provide the U.S. Air Force’s new tanker aircraft.

“In dealing with shrinking defense budgets we have two paths we are following: we have to boost our exports and build our global footprint to cope with the constraints in our home countries,” said Gallois. At the same time, he confirmed that EADS is pressing for more urgent negotiations with the German government over its plans to reduce orders for the group’s programs.

“We need stability through launching new programs even if [government clients are] scaling back other orders,” Gallois stated. He pointed to Cassidian’s Talarion unmanned aerial system as a program he sees advancing EADS’s research and development efforts with money saved from other programs, seemingly overlooking the fact that the governments concerned are looking to cut the overall spending.

Meanwhile at Airbus Military, the focus for 2012 is on securing initial operating clearance and ramping up production of the A400M transport. Airbus president and CEO Tom Enders reported that the company hopes to negotiate maintenance contracts for the A400M in the next few weeks, starting with an interim solution for the first few aircraft being delivered to France. The five flight-test aircraft currently flying have logged just over 2,600 hours.