BUSINESS NEWS

01 Dec 08. Last month, Louis Gallois, EADS chief executive, suggested it was perhaps time to scrap the European aerospace group’s dual headquarters in Paris and Munich. Far better to concentrate decision-making in one spot, and the obvious place was Toulouse – the Airbus headquarters. Mr Gallois is now going further. He thinks it would be a good idea to rename EADS simply Airbus. After all, Airbus is not only the group’s flagship and biggest revenue earner, but the name has become a globally recognised brand, far better known than the cumbersome EADS acronym – short for European Aeronautic Defence and Space company. He also wants to reduce the number of divisions from five to three to rationalise its activities. Indeed, many believe Mr Gallois would ultimately like to cut EADS down to two divisions – civil and defence. This would transform its structure into a mirror image of its main rival, Boeing, but without the US group’s more even balance between civil and defence activities. For this reason,
Mr Gallois is still keen to expand EADS’s exposure to the defence sector to reduce his overall dependence on Airbus. But the old Franco-German frictions that have dogged EADS from the beginning are again likely to frustrate Mr Gallois. Integrating defence and space activities into a single unit is likely to be blocked by both his German and Spanish partners. The Spaniards are keen to gain a greater share of business and are expected to resist losing their role in the A400M military transport operations. The Germans would find it difficult to agree to a French executive running a new integrated defence division given that EADS is part of the Eurofighter programme competing with the French Dassault Rafale. And the French are bound to insist on leadership in the defence unit for strategic reasons, not least the highly sensitive role of some of these activities in the country’s nuclear arsenal. It is hard to see Mr Gallois persuading his French and German political masters to agree to such a reorganisation. In any case, industry analysts seem to consider these proposals a side issue. The real challenge facing the group is preparing for what many expect will be the deepest crisis that Airbus has faced in its 30-year history. As one expert warned: “It is a bit like rearranging the deckchairs when the Titanic is heading for the iceberg.” The big issue is how Airbus will weather the storm ahead. It still needs to sort out problems in its A380 jumbo. Its future A350 project seems to be going nowhere fast. The A400M has been delayed by about two years largely because of engine problems. All this as the aviation industry heads for deep recession. IATA has just warned the “worst is still to come”. Airlines are delaying new aircraft deliveries. Soon they are likely to start cancelling orders. A new wave of airline consolidation is likely to reduce the number of customers for new aircraft – not only in Europe and the US but also in the Middle East and Asia. There is already talk of a merger between Abu Dhabi’s Etihad with neighbouring Dubai’s Emirates, both major A380 customers. Such a move would probably lead to cancellations since a consolidated group will presumably seek to do with two aircraft what each was planning with three. (Source: FT.com)

03 Dec 08. Dassault Aviation has pledged not to put forward one of its own executives to replace Denis Ranque as chief executive at Thales should he go after Dassault acquires a 26 per cent stake in the French defence electronics company. The business jet and combat aircraft group is poised to announce its acquisition of the stake from Alcatel-Lucent, the telecoms equipment supplier, following the agreement of a new shareholder pact with the French state, which owns 26.5 per cent of Thales. Reflecting Dassault’s desire to have a greater say over Thales’ industrial strategy, the French government has agreed to give up its right to break the pact in the event of persistent disagreeme