EADS aims for deal in US defence market

EADS, Europe’s leading aerospace and defence group, is planning acquisitions in the US defence market to reduce its vulnerability to the weakening US dollar and achieve a better balance between its commercial aircraft and defence interests.

Louis Gallois, EADS chief executive, said in an interview with the Financial Times that US acquisitions as well as partnerships and alliances had been identified as targets for Vision 2020, a corporate strategy that had recently been agreed and would shortly be presented to employees.

“My main concern for the future is the weakness of the US dollar,” he said. “It is a sword of Damocles hanging over our heads and it is a fantastic handicap against our only competitor [Boeing] in commercial aircraft.”

One of the aims of Vision 2020 was to achieve a balance between the commercial aircraft division Airbus and non-Airbus activities, chiefly in defence, space and helicopters. Airbus currently accounts for 64 per cent of EADS turnover, compared with the 47 per cent for commercial aircraft activities at Boeing.

Without action, Airbus could account for 70 per cent of the group within a few years, he said. Better balance was also needed to protect itself against the cyclical nature of commercial aerospace.

Mr Gallois admitted that one EADS takeover move considered in the US had been blocked by a controlling shareholder on the grounds that the Franco-German group could have lost management control of the operation, because of the sensitivities of foreign interests acquiring US defence groups.

“We know it is not easy to manage a US company, when you are a European one, but we have to get access to the American market, to produce in US dollars and for that we must increase our footprint in the US.”

At present 97 per cent of EADS employees are in Europe.

Source: K. Done - Financial Times

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