EADS to adopt Airbus name for group

Move is part of reorganisation that cements dominance of airliner business

European Aeronautic, Defence and Space will adopt the Airbus name for the entire group as part of a reorganisation that cements the dominance of its airliner business, which contributes the bulk of its revenue.

Europe’s largest aerospace company will scale its divisions down to three to include civil aircraft, helicopters as well as defence and space operations, the company said today as it reported a 23 per cent gain in second-quarter profit, driven by growth at Airbus.

Adopting its most recognisable brand for the entire group ends a decade-long attempt to create a balance between Airbus and other operations, most recently with last year's attempted merger with BAE Systems that failed amid government opposition. Chief executive Tom Enders has since reshaped the shareholder structure to curtail political influence, and has vowed to make EADS more investor-driven.

“The renaming simply gathers the entire company under the best brand we have, one that stands for internationalisation, innovation and integration - and also for some two thirds of our revenues,” Mr Enders said in the release.

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Earnings before interest and tax, pre goodwill impairment and exceptionals rose to €887 million from €724 million a year earlier, as sales increased 3 per cent to €13.95 billion. Analysts had estimated earnings of €803.7 million, according to a Bloomberg survey.

Airbus contributed €637 million to earnings, up from €391 million a year earlier as its sales rose 2 per cent to €9.74 billion.

The changes announced today are part of effort to reshape a company that relies increasingly on civil airliners for growth as its military business suffers from European budgetary constraints. With the new Airbus defence and space unit remaining in Munich, EADS keeps one of three major businesses anchored in Germany, where government resistance, partly based on the absence of a planned local base led EADS to abandon the BAE merger effort.

The company’s three businesses will now be known as Airbus, Airbus Defence and Space, and Airbus Helicopters. Bernhard Gerwert will be CEO of the defence and space division, with Domingo Urena-Raso heading the military aircraft portion of the division, Francois Auque remaining in charge of space, Evert Dudok heading communication, intelligence and security systems, and Thomas Mueller leading the equipment portion. The chief financial officer will be Julian Whitehead, with further nominations to be announced in the fall, EADS said.

With European governments spending less on defence, EADS’s new division will need to focus on growing markets in Asia and the Middle East, facing off against rivals such as Boeing and Lockheed Martin. Pooling all defence-related assets may help the company streamline its offerings in new markets.

“Pooling the space and defense entities Airbus Military, Astrium and Cassidian is the group’s response to the changing market environment with flat or even shrinking defense and space budgets in the Western hemisphere,” EADS said.

Bloomberg