ALEXANDER CAMPBELL / LONDON
Consolidation of military units aimed at winning systems integration work
EADS is amalgamating the bulk of its defence operations into a single division to better position the company to bid for major systems integration contracts.
Defence and Security Systems will combine the manufacturer's Military Aircraft and Defence & Civil Systems units, under current Defence & Civil Systems head Thomas Enders. While EADS says the main aim of the move is not to cut costs, it will ultimately "provide a better cost base" and staff numbers may be cut.
EADS hopes the reorganisation will boost its position against rivals, including Boeing, for large systems integration contracts on future programmes such as unmanned combat air vehicles and European combat aircraft. A still unnamed "systems house" will be created by EADS to combine the telecommunications and systems operations of Defence and Security Systems.
Of the company's €29.9 billion ($32.2 billion) revenue in 2002, €6 billion came from defence sales. EADS believes this will grow rapidly as projects move into large-scale production, balancing the continuing decline in commercial sales.
EADS predicts its overall sales this year will remain at the same level as 2002. With no recovery expected in the commercial aviation market before late 2004 at the earliest, according to EADS chief executives Philippe Camus and Rainer Hertrich, the defence business will be the main source of growth next year, with revenues forecast to rise to €9 billion. In the longer term, EADS aims to get 60% of revenues from Airbus and 30% from military sales. In 2002 the split was roughly 65% Airbus to 20% military.
The new division includes most of EADS's defence business, with a forecast revenue this year of €5 billion, rising to €7.5 billion next year. Military space operations remain with the Space division, accounting for only 10% of its space business.
The move follows Boeing's decision to merge its military, space and communications operations. EADS is following Boeing's lead, saying: "We are doing it for the same reasons...this is not an industry first."
Source: Flight International
