View Full Version : EADS, Russia & European defence
Makes you understand why BAe are selling their share in EADS. Tehy´d have no chance of access to the US market. Even as it is, this will probably be the death knell to attempts to loosen up Congress about sharing defence technology with Europe. Also has implications because the MOD is now tied into joint European defence procurement agreements...........
The Observer - 2nd Sept: Russian bear hug is just the ticket for European defence
The growing ties between the Russian and European aviation industries tell us a great deal about the way the world is moving. Russia's second-biggest bank has acquired a 5 per cent stake in EADS, the Franco-German aerospace and defence giant, showing that President Vladimir Putin is keen to become a strategic partner in a venture with interests in Airbus and Eurofighter.
No one believes that the EADS stake held by Vneshtorgbank is purely a financial investment, though hats off to the Russians for buying at an opportune moment: EADS's share price has bombed following a profits warning prompted by delays relating to the A380 jumbo jet. The bank should make a nice turn when, as is widely expected, it sells its stake to a new Russian aviation group, Russian United Aircraft, which makes Sukhoi fighter jets, among other things. Is this an emerging triple alliance between France, Germany and Russia that seeks to match the US as a global superpower? Almost certainly. Such links, of course, would have been unthinkable during the dark days of the Cold War.
And Britain is not unaffected. BAE, formerly British Aerospace, is part of the EADS consortium that makes Eurofighter and has a 20 per cent stake in Airbus, although it plans to sell its holding shortly.
Because EADS provides military equipment to the British armed forces, there are sensitive issues about the possible transfer of technology to the Russians, which politicians in Western capitals are already jumping up and down about.
But they are missing the big picture. If the Russians are moving in on the European aerospace and defence industries, it is because EADS wants it that way. This is a two-way street. Let's not forget that it was the French and Germans who set the ball rolling last year, when EADS took a 10 per cent stake in Irkut, the Russian military aircraft group.
Commercially, EADS's decision to tap into the Russian aviation market is a sensible one. It has been squeezed out of the US, where the French especially are not trusted when it comes to anything that impinges on US security, while the alternative of a full-scale merger with BAE - the big talking point six or seven years ago - is off the agenda because the British prefer to exploit the 'special relationship' and focus their efforts on the US.
If EADS can't get into America, cosying up to the Russians is a nobrainer: Russia is a big market in itself, but is also second only to the US as an exporter of foreign arms, with China and India among its biggest customers. As the Franco-German-Russian alliance develops, joint ventures in civil and military aerospace are certain to follow. As defence ties deepen so, too, do political ones. Not everyone will like it..........
BBC: BAE agrees to £1.87bn Airbus sale (http://news.bbc.co.uk/2/hi/business/5321626.stm) UK-based defence firm BAE Systems has agreed to sell its 20% stake in plane maker Airbus to EADS for 2.75bn euros (£1.87bn; $3.53bn). BAE estimates the sale will generate about £1.2bn net, allowing it to return about £500m to shareholders. If shareholders agree to the deal, pan-European EADS, which owns 80% of Airbus, will own the firm outright.....
GOLF_BRAVO_ZULU
6th Sep 2006, 23:35
Good thread but can we have sub-titles please?
GOLF_BRAVO_ZULU
6th Sep 2006, 23:40
PS
If this is the true score, my shares are for sale; immediate effect (I think I own about 4 roof panels on New Assembly Woodford). If I'm wrong on my ownership, I'm really pis**d off!
If this is the true score, my shares are for sale Which bit didn´t you believe..... :hmm:
The Times: (http://www.timesonline.co.uk/newspaper/0,,173-2346317,00.html) BAE to sell Airbus stake in spite of low valuation
.........BAE declared last night that it would proceed with the sale, after a unanimous decision by the board, despite the unexpectedly low valuation of £1.9 billion put on the stake by NM Rothschild, the investment bank, in July, which was confirmed by the PWC audit. The defence group, which believes that making commercial aircraft is no longer part of its core business, added that if it did not sell now it might be forced to hold on to the stake for “an extended period” to be sure of getting materially more than £1.9 billion..........
The Business online: (http://www.thebusinessonline.com/Stories.aspx?Vneshtorgbank%20EADS%20%E2%80%98raid%E2%80%99%2 0signals%20Russia%E2%80%99s%20resurgence&StoryID=5F6DC4EF-4F39-4A6E-A355-BE952820F5DB&SectionID=8099C021-87B0-48CA-A5F1-6335FDE21694) Vneshtorgbank EADS ‘raid’ signals Russia’s resurgence........
visibility3miles
13th Sep 2006, 13:19
Russians set sights on clout at EADS
Purchase of 5% seen as mere starting point
CHRISTIAN LOWE AND DOUGLAS BUSVINE
Reuters News Agency
MOSCOW -- Russia signalled its intent yesterday to become a major player in European aerospace giant EADS NV, sending the company's battered stock as much as 7 per cent higher.
In the first official comment by the Kremlin since state-owned OAO Vneshtorgbank amassed a 5-per-cent stake in EADS, a senior adviser to President Vladimir Putin said Russia would consider increasing its stake to a blocking minority. But, Sergei Prikhodko told a news briefing, such a move may be some way off and would depend on creation of an industrial partnership with EADS, which controls civilian aircraft maker Airbus SAS and builds the Eurofighter combat jet.
It was not immediately clear what size would represent a blocking stake, which gives a shareholder the right to veto key strategic decisions. Under Russian law it would be 25 per cent plus one share, but in the Netherlands, where EADS is registered, draft legislation would put the threshold at 30 per cent.
However, under a shareholder agreement between EADS's core owners -- Germany's DaimlerChrysler AG, the French state and Lagardère Groupe SCA -- its industrial partners have control over key appointments and strategy.
Yesterday's Kommersant daily quoted unnamed sources as saying Mr. Putin would push for representation on the EADS board when he meets French President Jacques Chirac and German Chancellor Angela Merkel in France later this month. Mr. Prikhodko said Russia would pursue deeper co-operation with EADS if it made economic sense and was in the interests of Russia's aviation industry.
"The question is whether our partners are ready for this sort of deep partnership, whether they will invite us to co-operate in this way," he told reporters.
No comment was immediately available from EADS. Earlier, a spokesman said EADS saw no need to take mutual equity stakes to cement its relationship with Russia.
EADS shares, which have been pummelled in recent weeks in response to a boardroom shakeup and delays on its A380 superjumbo project, closed up 5.4 per cent yesterday at €23.68 ($33.66).
Vneshtorgbank has called its stake a financial investment, but analysts say Russia's No. 2 bank is certain to be acting under Kremlin orders to build a strategic position, possibly for the state's newly created United Aircraft Co.
"Russia has already taken a 5-per-cent stake in EADS and there is nothing preventing Russia increasing its holding by buying shares in the market," said one share trader.
Analysts also say the Vneshtorgbank stake would likely end up in the hands of United Aircraft, a merger of state manufacturers including MiG, Sukhoi, Tupolev and Ilyushin.
MiG general director Alexei Fyodorov, designated head of UAC, said last week that UAC would like to buy up to 10 per cent of EADS, but added that the cost would be too high for now. An equity partnership with EADS could create a springboard for deeper co-operation in building passenger planes -- especially now that Britain's BAE Systems has announced plans to pull out of Airbus, analysts say.
Russia could contribute production capacity and design expertise and, in return for winning a board seat at EADS, may be prepared to open its market by reducing steep import tariffs on aircraft, said defence analyst Pavel Felgenhauer.
Who owns EADS?
DaimlerChrysler Aerospace AG (Germany) 22.5%
France 15%
Lagardère SCA (France) 7.6%
Sociedad Estatal de Participacion Industriales (Spain) 5.5%
Caisse des Dépôts (France) 2.3%
SOURCE: BLOOMBERG
Russia's new industrial air power
Russia's aircraft industry is going through a thorough restructuring, with a new entity called United Aircraft Co. taking over the country's leading manufacturers. United will be headed by Alexei Federov, who ran MiG prior to the merger. Mr. Federov last week expressed interest in acquiring a stake in EADS and analysts say they believe Vneshtorgbank's recent acquisition of 5 per cent was made for United and the Kremlin.
http://www.theglobeandmail.com/servlet/story/LAC.20060913.IBEADS13/TPStory/Business
Another unintended consequential development of US foreign policy...
1. Force democracy in the West Bank....terrorist organisation elected.
2. Drive Syrians out of Lebanon...Iranians replace them and support Hezbollah.
3. Remove Iraqi dictator from power...Balkanise Persia, and create a Sharia driven Islamic state.
4. Alienate European allies (Germany, France, Spain etc) for not getting with the programme, they start to build a defence relationship with Russia.
Bye bye NATO....you heard it here first !!
The Times September 19, 2006 - Putin uses $6bn bargaining chip in Airbus gambit
PRESIDENT PUTIN has armed himself with a $6 billion (£3.2 billion) bargaining chip with which to pull Airbus into the arms of the Russian aerospace industry by ordering Aeroflot to postpone an order for up to 44 long-range aircraft. The Russian state-owned airline, which had been expected to choose between the Airbus A350 and the Boeing 787 Dreamliner last week, instead has put off a decision indefinitely, according to Lev Koshlyakov, the company’s deputy general director.
The postponement, reportedly on the orders of the Kremlin, comes before a meeting between Mr Putin, President Chirac and Angela Merkel, the German Chancellor, in France this weekend. Mr Putin is believed to want to use the tender as a carrot with which to entice EADS, Airbus’s parent, into its fledgeling Russian equivalent, the United Aircraft Company. UAC, which will bring together MiG, Sukhoi and the listed Irkut, needs European industrial and commercial expertise to compete on the world stage, according to analysts.
Moscow raised the stakes in its attempt to force a tie-up when it authorised Vneshtorgbank, the state-owned Russian bank, to acquire a 5.02 per cent stake in EADS.
With Russian officials pressing for a seat on EADS’s board and Sergei Prikhodko, Mr Putin’s foreign policy aide, invoking a blocking stake in the medium term, the European group issued a polite rebuttal of Russian demands last week. However, Mr Putin appears to be determined to secure EADS’s help in rebuilding the Russian aerospace industry and is certain to raise the issue again when he meets M Chirac in Paris. As EADS tries to deal with production delays in its A380 Airbus superjumbo programme, the Aeroflot order will be used to tempt France and Germany.
The Times: Putin increases pressure on EADS (http://www.timesonline.co.uk/newspaper/0,,170-2373353,00.html)
VLADIMIR PUTIN stepped up the pressure for Russia to be given a seat on the board of EADS, the European aerospace company, with a warning that Moscow would increase its stake in the Airbus parent if France and Germany continued to resist his advances. The threat was delivered after a summit with President Chirac of France and Angela Merkel, the German Chancellor, in an 18th century French château on Saturday.
Mr Putin, who said that European nations were afraid of Russia “because we are big and rich”, also demanded EADS’s help in creating a Russian aerospace rival. He said that he had agreed with M Chirac and Frau Merkel to set up a working group to examine how the European giant could co-operate with Russia’s fledgeling United Aircraft Company (UAC).
Although the Russian President denied acting aggressively, he made clear his determination to lock Airbus into an embrace it would rather avoid. If Paris and Berlin failed to agree “on the rules of the game”, Vneshtorgbank, the state-owned Russian bank which acquired a 5.02 per cent stake in EADS over the summer, would “continue to work in the market”, he said.........
Cumbrian Fell
25th Sep 2006, 13:18
Correct me if I am wrong, but doesn't EADS provide the Paradigm services to 'our brave lads' as well as commercial use of communications satelites. Any HISS worries, folks?
s.d.porter
29th Sep 2006, 09:47
Not only paradigm the skynet 5 operator, but EADS Cogent in Newport
a Crypto/secure systems manufacturer for UK MOD, RTTS/DLAN(RAF), Cormorant(Army), Skynet5(Army,Navy), DII(UK MOD), ACVMU(RAF), TKLMS(RAF)
Even though the the French, Germans and Spanish own both companies.
There not allowed to access the secure parts of the sites, not much more than the Reception, Canteen and Toilets.
The Russians own I believe in total about 11% of EADS. They will in time get representation on the executive board of EADS. I don't see how it can be avoided.
In my view its a win, win situation for EADS they will get business in aircraft & avionics products and could get business in deployable secure comms & systems for the Russian Mlitary.
If they got their strategy right. In the latter case RF MOD is funding a great deal of R&D projects in these areas. Obviously looking at demonstrations that fit best into their chosen Concept of Operation, or even testing the Con Ops themselves.
Recall that Russia in Spring 2003 announced the formation of the Central Asian Rapid Reaction Force. Existing RF military comms infrastructure has largely been based on fixed installations.
This force would need something like the UK Cormorant. EADS in partnership with Russian partners could provide them with exactly that. The Russians could probably get an improved system with lessons learnt from the UK system. Which is incidently now in service with the Royal Signals, and the Users reportedly consider it to be the Dog's Bollocks.
A spoiler to discoorage the Russians buying them, or just a backhand subsidy? And, depending which, would the USA approve or disaprove?
BBC: Germany mulls taking EADS stake (http://news.bbc.co.uk/2/hi/business/6076364.stm)
The German government has signalled it may consider buying a stake in Airbus' parent company EADS, it is reported. German Finance Minister Peer Steinbrueck said it might make sense for the state to form a consortium with banks and private investors. The government's aim would be to save jobs and stabilise EADS, he told German newspaper Sueddeutsche Zeitung.
It comes after EADS shed office jobs and froze managers' salaries. Airbus has warned of "painful job losses" too. EADS has been weakened by costly delays to the flagship Airbus A380, with the first delivery of the high-profile plane put back to late 2007.
Berlin currently does not own any EADS shares, it has said it would most likely buy stock if German firm DaimlerChrysler decided to reduce its own shareholding. The motor giant is reducing its EADS shareholding to 22.5% and has signalled its intention to sell a 7.5% stake. Germany is worried that its influence within EADS, Europe's largest aerospace and defence firm, could diminish if non-German investors bought Daimler shares.....