Chris Jasper/AMSTERDAM

EADS is working to boost the size and performance of non-civil activities in a bid to reduce its reliance on Airbus. The European giant's Defence and Civil Systems and Military Transport Aircraft divisions took pre-tax losses last year, while Space saw profits fall at a time when Airbus' profits rose more than 50%.

Defence and civil systems will receive a boost with the formation of European missiles house MBDA (combining 'New' Matra BAE Dynamics with the missiles business of Alenia), which EADS co-chief executive Rainer Hertrich says is "more or less done", while the delayed European Military Aircraft Company venture (EMAC), again with Alenia, could also happen "within a few weeks".

Beyond these moves, EADS is restructuring its Space activities, and regards defence electronics as the area in which new initiatives are most needed.

"Airbus is doing well, but we want to keep a balanced portfolio," says Hertrich. " Space and defence need to be restructured and grown.

"Though Missiles is not profitable it has a strong backlog, but in defence electronics consolidation is not finalised, and while we're strong in Germany and France, there are other markets."

Hertrich says EADS wants to build up defence electronics to exploit the opportunities presented by any future European fighter project, which it would control via EMAC - planning that could be a threat to French rival Thales.

"Thales' airborne avionics division needs access to the platforms," says Hertrich. "In the short-term it will continue to be profitable, but in the long-term they may want to ask whether they will have that access. We control civilian and military and helicopter platforms, so it is easy for us to build up our avionics.

"We are thinking beyond Eurofighter and Rafale. There will be one European fighter aircraft, and we will have an excellent starting position," he adds. Hertrich says EADS also wants to establish a defence electronics presence in the UK, the other key player in European fighter development.

Defence and Civil Systems is being restructured after losing €110 million ($98 million) last year, but should be profitable by 2002. Defence sectors will also shed 1,500 jobs, with 900 going in Space and 600 at corporate HQ.

EADS' pre-tax profit dipped to €1.4 billion on sales of €24 billion. Charges included €110 million against Globalstar and €152 million of restructuring. Other write-downs took operating profit to €200 million and its net loss of €909 million on paper was due to its hedging position.

Source: Flight International