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4 Jun 03. Europe’s largest aerospace company, EADS (Paris:EAD.PA – News), expects to boost defence sales by 66 percent in the next three years with Britain a key target for growth, co-chief executive Philippe Camus told reporters in London.

Commercial aircraft unit Airbus SAS has led revenues at European Aeronautic, Defence & Space Co N.V. (EADS) (XETRA:EAD.DE – News) but with airlines struggling, EADS is looking to defence and space activities to
offset slowing growth.

“Our short-term goal is now to grow defence sales from €6bn to €10bn by 2005,” Camus said late on Tuesday.

EADS is set to lead Europe’s long-awaited A400M military air transport programme and is also a major player in the Eurofighter jet programme which aims to begin deliveries to the UK, Germany, Spain and Italy this year.

In the UK, Europe’s largest security and defence market, EADS expects to finalise a deal soon to supply secure, satellite-based communications system for British troops and hopes for other projects as well.

“There are several other programmes of significant size,” Camus said.”It is my vision that in two years some 25 percent or more of our defence backlog will be in the United Kingdom.”

He said success could triple the size of EADS’ UK order book, which he said stood at €5bn.

Camus’ push for sales in the UK comes as Europe looks to mend a split over the Iraq war caused when Britain and the United States took action despite strong opposition from France and Germany, the two countries where EADS has headquarters.

Camus said the long-term nature of defence planning meant the industry did not suffer fallout from temporary political differences.

“Despite recent wobbling in trans-(English) Channel relations, we are confident the MoD (Ministry of Defence) and DPA (Defence Procurement Agency) are firmly committed to real competition,” Camus said.

“Our Airbus business remains strong, even in the depths of one of the worst downturns in commercial aerospace,” Camus said, reiterating that Airbus expects to deliver 300 commercial planes this year, a figure it plans to review in late June or early July.

In the meantime, he said it was important for EADS to look beyond, including to space, an area where it is losing money but one in which EADS is determined to be Europe’s flagbearer.

“Diversity is a major strategic plus for us and this explains our absolute commitment to the space business,” Camus told reporters at a dinner meeting.

As warfare increasingly relies of electronically networked defence systems including the use of satellites, Camus said taking a leading role in the space market was “crucial”.

“Major acquisitions aren’t being targeted by EADS NV at present although opportunities would be considered if they arise”, he continued.

“We have to develop ourselves mainly through internal growth,” Camus told journalists at a briefing in London. “We do not need to make major acquisitions … Obviously, if there are opportunities we will consider them,” he added.

Comment: Although Camus has stated that no acquisitions are planned, sources close to BATTLESPACE suggest that the company may be eyeing the VT Group or SERCO to bolster its service operations. The Thales merger rumours will not go away, this would bolster EADS small electronics segment, earmarked by Stefan Zoller as a key area for development into a €3bn business.

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