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EADS to merge military transport into Airbus
By Kevin Done andSylvia Pfeifer in London
Published: December 16 2008 22:21 | Last updated: December 16 2008 22:21
EADS is reorganising its military transport aircraft operations by integrating the Spain-based business into Airbus, its commercial aircraft division.
The restructuring is one of the most important industrial moves to rationalise EADS since the Franco-German group overcame its complex corporate governance challenges last year and abandoned the complicated system of having joint French and German chairmen and chief executives.
The group is also planning closer co-ordination of its space and defence and security divisions under the leadership of François Auque, chief executive of the EADS Astrium space business. The separate military transport aircraft division was established from the outset when EADS was created in 2000 through a merger of large parts of the French, German and Spanish aerospace and defence industries. The division was based in Spain partly to satisfy national sensibilities among the three shareholder nations, where French and German interests have dominated and have often been in conflict. The Spanish state still holds a 5.5 per cent stake in EADS.
The separate organisations led to complicated reporting structures and responsibilities, however, as the EADS group worked to develop military derivatives of Airbus commercial aircraft and in particular to develop the A400M military transport aircraft.
The A400M programme has run into serious problems with growing delays and rising losses and the reorganisation announced yesterday has been made more urgent by the need to regain control of the project.
EADS was forced last month to take an additional €341m ($471m) charge for the latest delays. It warned it was still unable to produce a reliable delivery schedule and said it would face further charges for the loss-making, fixed price contract. It took an initial €1.37bn charge a year ago.
EADS has blamed the delays on problems with the propulsion system for the aircraft, specifically the engine control software. First delivery to the French air force was originally scheduled for October 2009 and the first flight was due to have taken place in the summer of this year, but there is currently no date for the start of the flight test programme.
Until yesterday overall programme responsibility for the A400M lay with the military transport aircraft division in Spain along with responsibility for production including the final assembly plant in Seville. Development of the aircraft has been undertaken by Airbus in Toulouse. As a result of yesterday’s shake-up, the Spain-based division will be integrated into Airbus under the name of Airbus Military.
Carlos Suarez, hitherto head of the division, will remain a member of the EADS executive committee and become a member of the Airbus executive committee reporting to Tom Enders, Airbus chief executive. The reorganisation strengthens the position of Mr Enders at the head of Airbus and underlines his claim to become the next chief executive of EADS.
Copyright The Financial Times Limited 2008