EADS Challenged To Meet U.S. Growth Target
EADS faces an uphill task to meet growth targets in the U.S. market in the wake of its loss of the U.S. Air Force KC-X tanker program to rival Boeing.
The European aerospace and defense contractor has a goal for its North American unit to reach $10 billion in revenue by 2020 as part of CEO Louis Gallois’ Vision 2020 for the company. Sean O’Keefe, CEO of EADS North America, says that reaching that goal “will take some real, serious work. No doubt about it.”
Even if the company had won the tanker program, the $10 billion target still would be “challenging,” O’Keefe notes, but so far the company is not backing away from the objective. O’Keefe says the goal is to reach that level through internal growth and acquisitions; EADS has long had plans to acquire in the U.S., but has been moving more slowly than its competitors on this front.
However, some industry observers believe that a significant acquisition in the near term will be difficult because of an ongoing disagreement in Germany about the company’s shareholding structure, with Daimler looking to reduce its stake but the German government worried that such a move could unsettle the Franco-German balance in the company (Aerospace DAILY, Feb. 10).
The road to the $10 billion target is currently unclear. While the company has had some success in the U.S., including winning the Light Utility Helicopter program for the U.S. Army, supplying TRS-3D radars for the U.S. Navy Littoral Combat Ship and placing Airbus Military CN-235 airlifters with the U.S. Coast Guard, it needs to secure a raft of further orders to reach the sales objective.
O’Keefe says the company did not respond as a potential bidder to a U.S. Navy request for information to provide the future presidential helicopter. The integration activity required on that project meant it was not a good fit, he suggests.
EADS has several competitive irons in the fire in the U.S., however. It is competing for the U.S. Army Armed Aerial Scout program and plans to pursue the U.S. Air Force Common Vertical Lift Support Platform, another helicopter effort to replace UH-1s. However, it faces stiff competition both from U.S. and other overseas firms in both cases.
Photo: EADS
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