Airbus Group has put its defence and security electronics and satellite communications services businesses up for sale in the latest stage of a long-running bid to get its ailing defence business on to a sustainable footing.
In what is essentially a focus on hardware, the group has declared that its core Defence & Space division’s activities are to be launchers and satellites, military aircraft and missiles. Commercial and para-public communications, including professional mobile radio and commercial satellite communication services, are top of the divestment list, as “the company sees possibilities to increase their development potential in different set-ups”.
Also on the sale block are subsidiaries and participations including Fairchild Communications, Rostock System-Technik, AVdef, ESG and Atlas Electronik. And for defence and security electronics businesses, “further industrial alternatives will be explored”.
The move comes more than a year after chief executive Tom Enders’ August 2013 announcement that the group then known as EADS would be rebranded as Airbus, and that its Astrium space, Cassidian defence and Airbus Military businesses would be combined into a single division, Airbus Defence & Space. That plan envisioned 5,800 job cuts across Astrium and Cassidian – about 15% of the pre-shuffle headcount – and that Cassidian would lose at least one major facility, at Unterschleissheim near Munich. The details have been the subject of discussions between management and unions, so how many jobs might eventually be lost to compulsory redundancies remains unclear.
So far, the push to move the business on to a new cost footing has been most evident in the deal, earlier this year, between Airbus Defence & Space and Safran to create a joint venture company that will in effect consolidate the Ariane launchers programme and take control of Europe’s launch operator, Arianespace. Details are still under discussion, but the objective is to create a single concept-to-flight company able to develop and operate an Ariane 6 rocket that can fly nine times yearly for €70 million ($91 million) per launch from 2021 – less than half the cost of the existing Ariane 5 vehicle, and comfortably competitive with upstart rival SpaceX’s Falcon 9.
As Ariane prime contractor and prime on propulsion, Airbus Defence & Space and Safran have managed a hugely reliable and successful programme, but all parties recognise the need to restrict participation in Ariane 6 to no more than six countries – half of the 12 active in Ariane 5. Enders and Airbus Defence & Space chief Bernhard Gerwert believe that while Ariane 6’s solid-fuel design concept promises huge cost, time and logistical savings over the traditional liquid-fuel Ariane 5, they see no hope of realising the goal of cost-competitiveness if hampered by an “unwieldy” Ariane 5 industrial structure dictated by the political need to share work among as many European nations as possible, rather than industrial logic.
In defence, however, Enders’ challenge is more severe. The group chief executive has warned that the 5,800 job cuts outlined in December 2013 may not be enough if Airbus’s natural defence market – Europe’s militaries, particularly Germany’s – do not order more equipment. Exports, he says, cannot make up the gap.
In December 2013, Enders and Gerwert warned that the Eurofighter programme will be a particular target for restructuring, and could be in for more job cuts as early as 2016 if export sales are not secured to keep assembly lines in Germany, Italy, Spain and the UK active beyond the current 2017 schedule.
Of the latest move to focus on space, military aircraft and missiles, Gerwert says: “Given the tight budgetary situation in our home countries and increasing competition on global markets, the portfolio review is an essential element to further develop our defence and space business, and to ensure its competitiveness.”
Source: FlightGlobal.com
