EADS

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European Aeronautic Defence and Space Company EADS N.V.
Type Public (Euronext: EAD, FWB: EAD)
Founded 2000
Headquarters Flag of Germany Ottobrunn, Germany
Flag of France Paris, France
(Registered in Schiphol-Rijk, the Netherlands)
Key people Thomas Enders (co-CEO)
Louis Gallois (co-CEO)
Industry Aerospace, defence, and telecommunications
Revenue €34,206 million (2005)
Operating income €2,852 million
Net income €1,710 million
Employees 113,210 (2005)
Parent SOGEADE
DaimlerChrysler
Subsidiaries Airbus
EADS Astrium
Eurocopter
MBDA (37.5%)
Website www.eads.com

The European Aeronautic Defence and Space Company EADS N.V. (EADS) is a large European aerospace corporation, formed by the merger on July 10, 2000 of Aérospatiale-Matra of France, Construcciones Aeronáuticas SA (CASA) of Spain, and DaimlerChrysler Aerospace AG (DASA) of Germany. The company develops and markets civil and military aircraft, as well as missiles, space rockets, satellites, and related systems.

Contents

[edit] History and activities

EADS was formed by its member companies in July 2000, to become the world's second largest aerospace company (after Boeing). EADS is also the second-largest European arms manufacturer (after BAE Systems.)

In early 2001 EADS and its partner in Airbus, BAE Systems, agreed to establish it as a fully integrated company. Airbus formally achieved this on 12 July 2001. This new arrangement saw the shareholdings established at 80% (EADS) and 20% (BAE). In April 2001 EADS agreed to merge its missile businesses with those of BAE Systems and Alenia Marconi Systems (BAE/Finmeccanica) to form MBDA. EADS took a 37.5% share of the new company which was formally established in December 2001.

On 16 June 2003 EADS acquired BAE's 25% share in Astrium, the satellite and space system manufacturer, to become the sole owner. EADS renamed the company EADS Astrium. In November 2003, EADS announced that it was considering working with Japanese companies, and the Japanese METI, to develop a hypersonic airliner intended to be a larger, faster, and quieter, replacement for the Concorde, which was retired in October the same year.

[edit] Management

EADS operates with two co-CEOs, one French, Louis Gallois, and one German, Thomas Enders. Similarly the leadership of the board of directors is shared between two co-chairmen: Arnaud Lagardère and Manfred Bischoff. This system was established with the creation of EADS in 2000. Members of the board of directors of EADS are: Manfred Bischoff, François David, Juan Manuel Eguiagaray, Thomas Enders, Noël Forgeard, Louis Gallois, Rüdiger Grube, Jean-Paul Gut, Arnaud Lagardère, Hans Peter Ring, Michael Rogowski.

In late 2004 Noël Forgeard (then Airbus CEO) was nominated by Lagardère as the next French CEO of EADS. Forgeard had suggested that this system should be abolished in favour of a single CEO in a move that DaimlerChrysler saw as an attempt to engineer a French dominated management team. Following protracted arguments, which caused embarrassment to EADS at the Paris Air Show, the appointment was confirmed by the EADS Board of Directors on June 25, 2005. At the same meeting the Board, in consultation with partner BAE Systems, named Gustav Humbert as President and CEO of Airbus.

On June 2, 2006 co-CEO Noël Forgeard and Airbus CEO Gustav Humbert resigned following the controversy caused by the June 2006 announcement that deliveries of the A380 would be delayed by a further six months. Forgeard was also under pressure due to the fact that he had sold EADS stock weeks before the A380 announcement which caused a 26% slump in the share price.

[edit] EADS divisions

[edit] Airbus Division

Main article: Airbus

Airbus S.A.S. was 80% owned by EADS, with BAE Systems owning the remaining 20%. In September 2006, both companies announced a transaction of all stock from BAE Systems to EADS, meaning that Airbus will be fully owned by EADS. Airbus headquarters are located in Toulouse, France.

On 2006-06-07 BAE Systems exercised its put option to force EADS to buy is stake which saw investment bank Rothschild appointed to give an independent valuation. Following the announcement in June 2006 that Airbus would delay deliveries of the A380 by up to seven months reports appeared questioning the impact on the value of BAE's share of Airbus. The Independent described a "furious row" between BAE and EADS, with BAE believing the announcement was designed to depress the value of its share.[1]

On 2 July 2006 Rothschild valued BAE's stake at £1.9 billion (€2.75 billion); well below the expectation of BAE, analysts and even EADS.[2] On 6 September 2006, BAE agreed to sell its stake in Airbus to EADS for £1.87 billion (€2.75 billion, $3.53 billion), pending BAE shareholder approval. [3] The deal closed on October 13, 2006.

[edit] Eurocopter Division

Eurocopter Tiger
Eurocopter Tiger
Main article: Eurocopter Group

Eurocopter is a manufacturer of light and medium civil and military helicopters. The CEO is Fabrice Brégier and the headquarters are in Marignane, France.

[edit] Military Transport Aircraft Division

EADS produces military transport aircraft, mainly through Airbus' majority ownership of Airbus Military. It is the developer and manufacturer of the Airbus A400M, a competitor to Lockheed Martin's C-130 Hercules. It manufactures the A310 MRTT and A330 MRTT conversions. Within the 2007 US defense budget the USAF has set aside $8.5 billion to buy aerial refueling tankers, starting with four per year from 2010- 2013 and rising to 15 a year starting in 2014. Boeing and EADS North America would compete for this program, replacing a single-source tanker program that was slated for Boeing.

[edit] EADS Astrium

Main article: EADS Astrium

EADS Astrium is the result of the merger of the EADS Space subsidiaries EADS Astrium, EADS Space Transportation and EADS Space Services into a single company, on 1 July 2006. The three companies became business units on that day. In July 2006 EADS announced that the newly merged company had been given the name "ASTRIUM - an EADS company", however on December 11th, 2006 the company introduced a new logo with François Auque (the EADS Astrium CEO) announcing the space division would instead be called "EADS Astrium".

There are three business units; EADS Astrium Satellites, EADS Astrium Space Transportation and EADS Astrium Space Services.

EADS Astrium (then EADS SPACE) also purchased Dutch Space (former space division of Fokker) in November 2005. EADS is a major contributor to the International Space Station, and is expected to deliver Columbus in 2007 through its subsidiary EADS Astrium Space Transportation.

[edit] Defence & Security Systems Division

Eurofighter Typhoon (EADS participation < 50%)
Eurofighter Typhoon (EADS participation < 50%)

The Defence & Security Systems division consists of five sub-divisions.

  • EADS Military Air Systems, including products such as the Mako/HEAT, and stakes in the following companies:
  • EADS Services
  • Missiles
  • Defence Electronics, the sensors and avionics house of EADS
  • Defence and Communications Systems, electronics/software system house

[edit] FiReControl

In March 2007, the Fire Service Minister Angela Smith announced that the Defence and Security Systems division had been awarded a £200m contract over eight years to provide the IT infrastructure for the FiReControl project in the UK.[4] FiReControl is a large scale project that will reduce the number of fire service control rooms in England from the current 46, to nine 'regional control centres' over the coming years.

[edit] EADS North America

EADS North America is the U.S. holding company for the North American activities of EADS. It is chaired by Ralph Crosby.

[edit] Other

EADS Socata is a manufacturer of small aircraft. Dresden Elbe Flugzeugwerke (EADS EFw) convert aircraft into freighter.

[edit] Shareholders

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EADS' ownership structure, from their 2005 annual report.

As of 31 December 2004, about one-third of EADS stock is publicly traded on six European stock exchanges and the rest is divided among three major shareholders. [1][2]

On July 17, 2004 The Economist reported that the three major shareholders, DaimlerChrysler, SOGEADE and SEPI, intend to sell their shares by 2006–2007. DaimlerChrysler would like extra capital to invest in its core activities, Lagardère wants to withdraw from defence aerospace, and the French government is pursuing privatisation where appropriate.

On April 4, 2006, DaimlerChrysler announced its intention to reduce its shareholding from 30% to 22.5%. The company places a value of the stake at "approximately €2.0 billion." [5] Lagardère will reduce its holding by an identical amount. However, Caisse des Dépôts et Consignations, a unit of the French government, acquired 2.25% of EADS. At issue as a result is the fact that the German and French shareholdings are now in imbalance.[6]

On August 30, 2006, shortly after the stock price decline caused by the A380 delivery delays, more than 5% of EADS stock has been reportedly purchased by the Russian state-owned Vneshtorgbank.[7]

On October 3, 2006, shortly after EADS admitted further delays in the Airbus 380 program would cost the company 4.8 billion euros in lost earnings in 2010, EADS shares, traded on the Paris arm of Euronext, were suspended after they surpassed the 10 per cent loss limit. Trading resumed later in the day with the one day loss holding at 7 per cent [3].

In October 2005 the British Ministry of Defence warned European politicians to stop, as it sees it, interfering in the corporate governance of EADS. The UK Defence Procurement Minister Lord Drayson has hinted that the UK government, a major customer for EADS, may withhold future contracts. "As a key customer, we see it as important for EADS to move in a direction that is free from political interference." [8]

[edit] Criticism

[edit] Cluster bombs

As a result of criticisms, the Norwegian Government Pension Fund - Global’s Advisory Council on Ethics recommended, in 2005, that the Ministry of Finance should exclude this company from the Pension Fund, arguing that EADS manufactures “key components for cluster bombs.” As a result, since 2 September 2005, EADS and its sister company EADS Finance BV have been excluded from the investment portfolios of the Norwegian Government Pension Fund.[9]

[edit] Bribery

In 2003 Tony Yengeni, former chief whip of South Africa's ANC, was convicted of fraud relating to an arms deal with South Africa, in which EADS were major players[10], worth around $5bn. The BBC reported that EADS had admitted that it had "rendered assistance" to some 30 senior officials to obtain luxury vehicles, including defence force chief General Siphiwe Nyanda.[11]

[edit] Alleged insider trading

News reports in June 2006 focussed on possible insider trading at EADS. Joint CEO Noël Forgeard made a 2.5 million Euro profit on the sale of EADS shares just weeks before news was released of delays to the A380.

[edit] See also

[edit] References

[edit] External links


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