EADS 'eyes stateside acquisition'

EADS wants to identify up to two acquisitions in the United States this year, according to an internal memo obtained by Reuters as the European aerospace group battles opposition in Congress to a US Air Force deal.

Chief Executive Louis Gallois told staff that one of the group's top 10 objectives for 2008 was to "propose two acquisition projects in the field of defense, security or services to the board, at least one of which is in the United States".

The aim is part of a call to action for 2008 distributed days before EADS is expected to unveil annual losses triggered by industrial problems in its European plants and a weak dollar.

In the memo, Gallois makes delivering on EADS' financial promises and beefing up its industrial performance the group's No 1 priorities for 2008, as its Airbus civil planemaker unit reels from costly delays to its A380 superjumbo.

Also high on the list is completing the full or partial sale of half a dozen Airbus factories, opposed by French and German unions, and ensuring A380 output increases sharply as planned.

The goals for 2008 are designed to kick start a plan called Vision 2020, which aims to reshape Europe's top aerospace company as a global player over the next 12 years.

"This will be an action year in which we start turning Vision 2020 into reality," Gallois said in the memo.

The written pep talk was distributed in the past week and its existence was confirmed by two sources who asked not to be named because the list has not been released outside the group. A spokesman for EADS declined to comment.

In its biggest breakthrough in defense outside Europe, on Feb 29, EADS and partner Northrop Grumman won a $35 billion order for aerial refueling tankers dubbed KC-45A.

The award triggered an outcry over US jobs. Backers in Congress of defeated Boeing are trying to block the deal.

Gallois told staff in the memo that one of the company's objectives in 2008 would be to "position EADS in the US defense and security markets, and as a major step, ensure successful start of the KC-45A tanker program."

Gallois' strategy chief said in January EADS was looking for a mid-sized aerospace services company worth some $1 billion, but the memo appeared to mark the first time a precise number of deals and timeframe have been grafted onto the shopping list.

Airbus Chief Executive Tom Enders said that Alabama, where the KC-45A tankers will be assembled, would eventually become the "home base" for Airbus efforts to broaden its industrial footprint outside Europe.

Airbus plans to assemble some commercial freighters there.

Since it was founded from a French, German and Spanish merger in 2000, EADS has ridden a wave of demand for passenger jets. Now, top managers say it is over-dependent on cyclical airline demand as the economy falters. It wants to increase the 20 percent share of defense in group activities to about half.

Executives are also desperate to ease the choking effect on the group's finances of a weak dollar, saying recently that the company's survival was at stake - though part of that rhetoric was seen as a bid to convince European unions on restructuring.

Agencies

(China Daily 03/11/2008 page16)