EADS order graphs

Failed merger leaves EADS seeking job cuts

Europe’s biggest aerospace group is set to unveil a major restructuring, while a UK firm benefits from a civil aviation boost.

Bosses at aerospace giant EADS are warning of spending cuts and job losses, ahead of an expected announcement in December on the details of its restructuring plans. Over the summer, the owner of Airbus announced it would revamp and adopt the Airbus name for the whole group. The move came in the wake of its failed venture last year to merge with the UK’s BAE Systems – an aspiration that flopped after the French, German and Spanish governments withheld support.

This left EADS with little choice but to streamline itself in an increasingly competitive environment, which includes not only BAE but also Boeing and some smaller rivals. EADS is expected to announce plans to seek synergies from its defence-related operations, which have been particularly hard hit by shrinking government spending.

There will probably be a merger between the military transport business Airbus Military, the Cassidian fighter-plane unit and Astrium, the satellite arm that has UK operations in Portsmouth, Poynton and Stevenage.

It is not clear how many of the 143,000 jobs across EADS will be affected. But this month, in an interview with a German newspaper, EADS CEO Tom Enders warned that jobs cuts “could not be avoided”.

Confirming that an announcement would be made in December, Enders told Süddeutschen Zeitung that “hard measures” would be necessary to implement cuts and create synergies in defence activities. But he added that the defence business would not be up for sale.

EADS announced over the summer that the restructuring plans would be implemented from January 2014, with completion expected in the second half of that year.

But why such gloomy prospects for EADS, when it reported a 31 per cent rise in first-half net income to €760m, on the back of a 6 per cent rise in revenues to €26.3bn.

Enders said that the company had been losing billions of euros from a lack of military orders, particularly in Germany. He hinted that EADS could benefit from “support from Berlin”.

This frankness about the impact of spending, particularly in Europe, is unusual, according to analysts. It remains to be seen whether next year’s streamlining will persuade the French and German governments to do a U-turn and push for a renewed merger attempt with BAE.

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