Andrew Doyle/MUNICH

EADS is to restructure its loss-making Defence and Civil Systems (DCS) unit with a cross-border integration plan aimed at "building the basis for profitable growth".

The company says its French and German defence businesses are to be "rapidly combined within cross-border structures."

The move is part of plans by EADS to reduce dependence on its 80% holding in Airbus by turning around the defence activities and preparing the ground for what it hopes will be "sustained growth".

EADS executive vice president and head of DCS, Thomas Enders, says integration will allow for "better resource allocation, which will enhance our products and services and provide an improved cost base". At the same time, he says, the new structure must be "compatible with the requirements of customers in France and Germany, particularly with respect to nationally sensitive issues".

DCS encompasses missiles, defence electronics, telecommunications and services. "To reach our growth and profitability targets we need to achieve the turnaround quickly," says Enders.

EADS says DCS is looking to make acquisitions and initiate new partnerships but will also have to make divestments, with shrinking defence budgets in France and Germany requiring more workforce reductions. Around 1,500 staff were shed during 2000 and the company estimates a further 950 jobs will go in France and 550 in Germany "if the market situation does not improve".

Four new DCS business units are to be created:

• MBD - the missiles venture between EADS and BAE Systems - will "soon be enlarged" with the addition of Alenia Marconi Systems to form "MBDA". Also planned is the "speedy integration" of German missiles unit LFK.

• Defence Electronics will integrate French and German activities "under one roof" to attack growing airborne systems and command control communications intelligence, surveillance and reconnaissance (C4ISR) markets.

• Services will aim to build presence in the market for outsourced military and governmental services in France, Germany and Spain.

• Telecommunications will focus on EADS Defence and Security Networks, a joint venture with Nortel Networks.

In 1999 DCS achieved pro-forma revenues of €3.8 billion, 16% of the EADS total. The company was formed in July with the merger of DaimlerChrysler Aerospace Aerospatiale-Matra, and CASA.

Source: Flight International