Airbus Restructuring

Defense Division Under Attack

Airbus A400M transport plane Source DPA 40837607
Airbus is having trouble to delivering its new military transport plane, the A400M, to its clients, including the German military.
  • Why it matters

    Why it matters

    If Airbus, the world’s second-largest airplane maker, cannot resolve its problems at its defense operations, they will continue to drag down profits.

  • Facts

    Facts

    • Airbus is in talks to sell defense operations as part of a wider restructuring program
    • The restructuring affects a total of 5,800 employees, of which more than half will see their jobs disappear.
    • Airbus took a €551, or $617 million, charge in the fourth quarter due to delays to its A400M military airplane.
  • Audio

    Audio

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Airbus, the troubled European aircraft maker that posted a profit warning in December, said it could sell some of its businesses in Germany as part of a wider restructuring of its defense and space division.

Airbus spokesman Gregor von Kursell told Handelsblatt Global Edition that the company was considering the future of its plants, including its operations in the Germany.

“We are in discussions but we can’t give indications yet on how far we are and to whom we are talking,” he said.

Airbus has several plants in Germany, including larger operations in the cities of Ulm, Friedrichshafen and Unterschleissheim.

Airbus could sell its professional mobile radio and commercial satellite communications services activities as well as some subsidiaries.

The plant in Ulm builds radar systems, while the company develops satellites, probes and navigation equipment in Friedrichshafen. Airbus, which employed 49,000 people in Germany at the end of 2013, declined to give details on just which plants would be affected or if there would be job losses.

Airbus is a European consortium with its headquarters in Amsterdam though its main operations are in Germany and France. It has been burdened by delays of a new military transport plane, the A400M, and its super-sized passenger jumbo jet A380. The company issued a profit warning in December.

The sales talks of defense operations are part of a restructuring plan announced in 2013, when Airbus said it wanted to make its defense and space operations more competitive. The reorganization would affect about 5,800 employees, of which more than half would lose their jobs, Airbus said at the time.

 

Airbus Group-WTB 2014

 

Airbus, which reported better-than-expected annual results on Friday despite a charge of €551 million, or $617 million, employed 138,622 people worldwide at the end of last year.

Mr. von Kursell of Airbus declined to say which German or European operations specifically could be affected.

“All the defense sites are in the scope of the restructuring. Without giving any indication of what will happen, all defense sites are concerned,” Mr. von Kursell said.

In September last year, Airbus said it could sell its professional mobile radio and commercial satellite communications services, as well as certain subsidiaries and participations, including Frederick, Maryland-based Fairchild Controls, Rostock System-Technik based in Germany, AvDef in France, ESG in Germany and Bremen-based Atlas Elektronik.

As part of restructuring its defense and space technology operations, Airbus in December sold its 27 percent stake in Finnish defense, security and aviation services provider Patria through a share buyback transaction to Patria itself.

 

Video: Airbus’ military transport airplane, the A400M.

 

The reorganization will also affect businesses in France, Spain and Britain, Airbus said in 2013 when it announced the changes.

Airbus on Friday reported higher-than-expected quarterly results despite a half billion euro charge on its troubled defense jet A400M, which is plagued by production delays. Fourth-quarter revenue rose 9 percent to €20.2 billion compared with the same period in 2013.

Net profit more than tripled to €944 million due to higher sales at its commercial aircraft operations, the absence of a charge which weighed on fourth-quarter results in 2013 and a positive foreign currency impact.

Airbus shares were up 5.7 percent on Friday by 1015 GMT at €54.56, having recovered from a 20 percent drop to almost €40 in December after its profit warning.

 

Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the author: kreijger@handelsblatt.com

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