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BUSINESS NEWS

December 11, 2009 by

09 Dec 09. EADS, the European defence and aerospace group, has asked the seven partner nations behind the much delayed A400M military transport aircraft for a further €5bn ($7.36bn) to complete the project. Should the countries agree, it would raise the project costs by about 25 per cent but would provide a lifeline to EADS. Officials are reviewing the request, according to German defence ministry officials. Senior negotiators will discuss the topic further on Friday in Seville, Spain, where the A400M is scheduled to make its much anticipated first flight. The A400M deal, signed in 2003, was a fixed-price €20bn contract, making EADS’s Airbus subsidiary responsible for all overruns. EADS has already made provisions for €2.4bn of losses on the A400M and is burning through €140m of cash a month on the project. But it is tied to the aircraft because cancelling would trigger €5.7bn of development funding repayments and damage its credibility. Still it will be a difficult deal to sell to the customer countries that between them have ordered 180 of the mid-sized military transporters. Defence budgets are under pressure due to the financial and economic crisis. An EADS spokesman declined to comment on the request. (Source: FT.com)

07 Dec 09. Luc Vigneron, the recently appointed head of Thales, will on Friday unveil a restructuring plan for Europe’s biggest defence electronics group that is expected to include targets on cost-cutting and performance. The Thales chief executive, who replaced ousted boss Denis Ranque after Dassault Aviation became the group’s second-largest shareholder in May, was expected to stamp his authority on the company with a management shake-up as part of an overhaul of the organisation. Mr Vigneron is likely to promote a new generation of younger Thales executives rather than bring in any senior managers from outside, according to sources close to the company. Thales has already lost a number of senior executives since Mr Vigneron took over in May, and others are set to leave. The closely guarded plan has been drawn up in consultation with Charles Edelstenne, the Dassault Aviation chief executive. Mr Edelstenne has demanded Thales improve its performance significantly, in particular its ability to manage returns on big projects. The company, which was already struggling to cope with delays on Airbus’s A400M military transport aircraft, on which it was a large supplier, last month issued a profits warning for the second half after revealing problems on other contracts. One person close to the group said: “Dassault considers that the way Thales priced contracts and delivered on them has not been satisfactory. “There will be a much stronger results culture than there has been in the past.” Mr Vigneron is also expected to address the protracted discussions with Safran, the French defence and communications group, on potential asset swaps. However, he is not expected to announce a firm agreement, according to insiders. It remains unclear whether the final deal will be a full exchange of assets or a series of joint ventures. The discussions date back to 2007 but were put on hold after the management upheaval that followed Mr Ranque’s departure. They were revived about a month
ago as part of Mr Vigneron’s strategic review. The French government, which holds 27 per cent of Thales and 30 per cent of Safran, is keen to see a reshuffle of assets to ensure that the two groups no longer compete against each other in defence tenders.Both companies are rivals in optronics and some civil sectors. Insiders have in the past confirmed that the government would be keen to see the groups swap some of their assets. (Source: FT.com)

03 Dec 09. Electro Optical Systems (EOS), Canberra, announced Dec. 3 that it bought the remote weapon systems business unit of its U.S. partner, Recon Optical Inc. (ROI), for an undisclosed sum. The purchase was carried out by EOS’s wholly-owned U.S. subsidiary, EOS Defense Systems, Tucson, Ariz.

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