EADS to temper US growth plans: Gallois

Washington DC
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Airbus parent EADS may formally extend the timetable on "ambitious" growth objectives in the US defence and security market in the wake of its withdrawal from the $35 billion US Air Force KC-X refuelling tanker competition.

It is not clear how much the opportunity to sell 179 Airbus A330-based tankers over the next two decades to the US Air Force figured in a 2020 EADS growth strategy. This called for expanding non-Airbus sales for its North American business from about $1.7 billion this year to $10 billion over the next decade.

Chief executive Louis Gallois says: "It's clear we have to be less ambitious without the tanker [contract]."

kc-45
 © Northrop Grumman

Gallois told an EADS North America investors forum that any adjustment to the 2020 growth strategy based on the KC-X result would be made before May. Northrop Grumman, EADS North America's partner in the KC-X contract competition, decided on 8 March to not submit a bid over complaints of competitive bias.

The company launched its North American strategy in 2002, establishing the EADS NA subsidiary and appointing Ralph Crosby as chief executive. Five months ago, Crosby was elevated to chairman and EADS replaced him with former NASA administrator Sean O'Keefe.

The company established a manufacturing foothold in the US defence market by winning an army contract to build 345 UH-72 Lakota light utility helicopters. EADS is assembling the UH-72s at a new plant in Columbus, Mississippi.

Capturing the KC-X contract, however, was the prize in the EADS expansion strategy. The Northrop/EADS team won the contract in February 2008, but the award was overturned by the Government Accountability Office four months later.

The USAF attempted to rerun the contest this year, but Northrop decided the terms of the evaluation biased the competition in favour of the Boeing KC-767.

EADS has not ruled out interest to submit an independent bid for the contract, although Gallois says he agrees with Northrop's reasons for withdrawing.

Moreover, Gallois also says it would be "impossible" to submit for EADS to submit an independent bid within the USAF deadline on 10 May.