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 Announcing the results of a portfolio review, Europe's largest
aerospace group signalled a break with previous efforts to diversify
into security activities and a halt to investment in defence
electronics, in which it lacks the scale of rivals.
Europe's defence industry is struggling as cash-strapped governments
cut back on military spending. EADS, later renamed Airbus, responded
in 2012 by trying to merge with Britain's BAE Systems, but the deal
was blocked by Germany.
That, coupled with the stronger-than-expected growth of its jetliner
business, led Airbus to drop a previous goal of having broadly
balanced revenues from its commercial and defence arms, and launch a
reassessment of its defence and space activities.
The group said on Tuesday it would sell its Professional Mobile
Radio secure communications assets and confirmed plans to sell a
49-percent stake in submarine supplier Atlas Elektronik, unwinding
two efforts at diversification embarked on nine years ago. It said
it would also consider selling other commercial and non-governmental
satellite communications activities.
Also up for sale are systems and software company ESG, as earlier
reported by Reuters, and three smaller units: U.S.-based
environmental systems supplier Fairchild Controls, German cabin
simulator maker Rostock System-Technik and AvDef, a small aviation
company in southern France that trains fighter pilots.
In early trading, Airbus Group shares were down 0.7 percent, in line
with the broader European market <.FTEU3>.
The move comes weeks after a reorganisation of space launcher
activities jointly with France's Safran <SAF.PA> and leaves Airbus
Group's share of the Eurofighter and MBDA missile consortia, as well
its own A400M airlifter, at the centre of a non-jetliner portfolio
focused on aeronautics and space.
"We came to the conclusion that our division must focus on the
following core businesses: Space, Military Aircraft, Missiles, and
related Systems and Services," Bernhard Gerwert, head of the Defence
& Space business, said in a letter to staff.
"These are the key areas in which we will further invest to
strengthen our leading position."
The shake-up is likely to test the group's prickly relations with
the German government, following warnings from group Chief Executive
Tom Enders about the impact of Berlin's stringent export controls on
defence jobs and industrial investment.
In an interview, Gerwert played down the row, however.
"I want to make clear that this is not just about cutting more jobs
or closing more sites, quite the contrary," he told Reuters. "We’re
focusing on certain businesses and are looking for someone who’s
willing to develop and invest in these businesses.”
But he said Airbus would no longer invest in defence electronics and
security, something it would need to do in order to reach a global
position. The group is overshadowed by competitors including
France's Thales, Europe's largest defence electronics firm.
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THYSSENKRUPP EXPLORES ATLAS BUYOUT
Airbus paired its defence and space unit a year ago under the brand
of its best-known civil planemaking unit and announced a review of
assets. The division had proforma sales of 14.4 billion euros in
2013, of which electronics made up 9 percent and communications,
intelligence and security had 18 percent.
Gerwert said he aimed to get the first indications of interest for
the units being sold by the end of the year and to complete the
first disposals in the first half of 2015.
It is too early to say how many jobs would be affected and there was
no financial goal for the sale proceeds, he said.
The sale of Atlas Elektronik puts a coveted slice of Germany's
defence industry back on the market after Airbus Group, then known
as EADS, fended off competition from Thales to buy the sonar maker
from BAE Systems in 2005.
German press reports have identified Thales or Germany's Rheinmetall
as possible suitors for the stake, but Gerwert said he would first
talk to majority shareholder ThyssenKrupp.
Asked whether a buyer was already in sight, he said: "No, not yet.
TKMS (ThyssenKrupp Marine Systems) has a stake of 51 percent (and)
we’re holding 49 percent, so initial talks will certainly be held
with TKMS.”
Asked whether a sale to a foreign party was possible, he said: "Let
me put it this way: nothing is inconceivable."
ThyssenKrupp said it was examining all options on whether to buy out
its partner's stake.
A spokesman for Thales declined comment on Atlas Elektronik as well
as on separate reports it could bid for a railway business being
sold by Italian aerospace firm Finmeccanica, as the rest of Europe's
aerospace industry sheds non-core assets.
(Editing by Jason Neely and Mark Potter)
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