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The European Aeronautic Defence and Space Company EADS N.V. (EADS) is a large European aerospace corporation, formed by the merger on July 10, 2000 of Aérospatiale-Matra of France, Construcciones Aeronáuticas SA (CASA) of Spain, and DaimlerChrysler Aerospace AG (DASA) of Germany. The company develops and markets civil and military aircraft, as well as missiles, space rockets, and related systems.

History and activities

EADS was formed by its member companies in July 2000, to become the world's second largest aerospace company (after Boeing). EADS is also the second-largest European arms manufacturer (after BAE Systems.)

In early 2001 EADS and its partner in Airbus BAE Systems agreed to establish it as a fully integrated company. Airbus formally achieved this on 12 July 2001. This new arrangement saw the shareholdings established at 80% (EADS) and 20% (BAE). In April 2001 EADS agreed to merge its missile businesses with those of BAE Systems and Alenia Marconi Systems (BAE/Finmeccannica) to form MBDA. EADS took a 37.5% share of the new company which was formally established in December 2001.

On 16 June 2003 EADS acquired BAE's 25% share in Astrium, the satellite and space system manufacturer, to become the sole owner. EADS renamed the company EADS Astrium. In November 2003, EADS announced that it was considering working with Japanese companies, and the Japanese METI, to develop a hypersonic airliner intended to be a larger, faster, and quieter, replacement for the Concorde, which was retired in October the same year.

Management

EADS operates with two co-CEO's, one French and one German, currently Louis Gallois and Tom Enders. Similarly the leadership of the board of directors is shared between two co-chairmen: Arnaud Lagardère and Manfred Bischoff. This system was established with the creation of EADS in 2000. Current members of the board of directors of EADS are: Manfred Bischoff, François David, Juan Manuel Eguiagaray, Thomas Enders, Noël Forgeard, Louis Gallois, Rüdiger Grube, Jean-Paul Gut, Arnaud Lagardère, Hans Peter Ring, Michael Rogowski.

In late 2004 Noël Forgeard (then Airbus CEO) was nominated by Lagardère as the next French CEO of EADS. Forgeard had suggested that this system should be abolished in favour of a single CEO in a move that DaimlerChrysler saw as an attempt to engineer a French dominated management team. Following protracted arguments, which caused embarrassment to EADS at the Paris Air Show, the appointment was confirmed by the EADS Board of Directors on June 25, 2005. At the same meeting the Board, in consultation with partner BAE Systems, named Gustav Humbert as President and CEO of Airbus.

On June 2 2006 co-CEO Noël Forgeard and Airbus CEO Gustav Humbert resigned following the controversy caused by the June 2006 annoucement that deliveries of the A380 would be delayed by a further six months. Foregeard was also under pressure due to the fact that he had sold EADS stock weeks before the A380 announcement which caused a 26% slump in the share price.

EADS divisions

Airbus Division

Airbus S.A.S. is 80% owned by EADS, with BAE Systems owning the remaining 20%. Airbus headquarters are located in Toulouse, France.

In March 2006 reports in the British press intensified about the possibility of a sale, with BAE's 20% "conservatively valued" at €3.5 billion EUR ($4.17 bn USD). On April 6 2006 BBC News reported that BAE Systems was selling its share."BAE Systems to sell Airbus stake." BBC News. April 6, 2006. The move was seen by many analysts as a move to make partnerships with U.S. firms more feasible, in both financial and political terms."BAE in Talks With EADS to Sell its 20% Airbus Stake; British Firm is Focusing Increasingly on Defense Market, Especially in U.S." Michaels, D. The Wall Street Journal. April 7, 2006. BAE originally sought to agree a price with EADS through an informal process. However due to the slow pace of negotiations and disagreements over price, BAE exercised its put option which saw investment bank Rothschild appointed to give an independent valuation. Following the announcement in June 2006 that Airbus would delay deliveries of the A380 by up to seven months reports appeared questioning the impact on the value of BAE's share of Airbus. The Independent described a "furious row" between BAE and EADS, with BAE believing the announcement was designed to depress the value of its share. BAE launches attack on EADS over Airbus superjumbo warning The Independent. Retrieved 15th June, 2006

On 2nd July 2006 Rothschild valued BAE's stake at £1.9 billion (€2.75 billion); well below the expectation of BAE, analysts and even EADS. "BAE under pressure to hold Airbus stake" The Guardian Retrieved 3 July 2006

Eurocopter Division

Eurocopter is a manufacturer of light and medium civil and military helicopters. The CEO is Fabrice Brégier and the headquarters are in Marignane, France.

Military Transport Aircraft Division

EADS produces military transport aircraft, mainly through Airbus' majority ownership of Airbus Military. It is the developer and manufacturer-to-be of the Airbus A400M – competitor to Lockheed Martin's C-130 Hercules. It manufactures the A310 MRTT and A330 MRTT conversions. Included within the 2007 US defense budget the USAF has set aside $8.5 billion to buy new aerial refueling tankers, starting with four per year from 2010- 2013 and rising to 15 a year starting in 2014. Boeing and EADS North America would compete for this program, replacing a single-source tanker program that was slated for Boeing.

EADS Space

The Space division consists of three sub-divisions:

EADS SPACE has also purchased Dutch Space (former space division of Fokker) in November 2005. EADS is a major contributor to the International Space Station, and is expected to deliver Columbus in 2007 through its subsidiary EADS SPACE Transportation.

Defence & Security Systems Division

The Defence & Security Systems division consists of five sub-divisions.
  • EADS Military Aircraft, including products such as the Mako/HEAT, and stakes in the following companies:
  • EADS Services
  • Missiles
  • Defence Electronics, the sensors and avionics house of EADS
  • Defence and Communications Systems, electronics/software system house

EADS North America

EADS North America is the U.S. holding company for the North American activities of EADS. It is chaired by Ralph Crosby.

Other

EADS Socata is a manufacturer of small aircraft.

Dresden Elbe Flugzeugwerke (EADS EFw) convert aircraft into freighter.

Shareholders

As of 31 December 2004, about one-third of EADS stock is publicly traded on six European stock exchanges and the rest is divided among three major shareholders. **

On July 17, 2004 The Economist reported that the three major shareholders, DaimlerChrysler, SOGEADE and SEPI, intend to sell their shares by 2006–2007. DaimlerChrysler would like extra capital to invest in its core activities, Lagardère wants to withdraw from defence aerospace, and the French government is pursuing privatisation where appropriate.

On April 4, 2006, DaimlerChrysler announced its intention to reduce its shareholding from 30% to 22.5%. The company places a value of the stake at "approximately €2.0 billion." Lagardère will reduce its holding by an identical amount. However, Caisse des Dépôts et Consignations, a unit of the French government, acquired 2.25% of EADS. At issue as a result is the fact that the German and French shareholdings are now in imbalance."[http://www.iht.com/articles/2006/04/11/business/airbus.php Airbus plays catch-up with A350 jet." Phillips, D. International Herald Tribune. April 11, 2006.

Criticism

Arms Dealing

Like any large industrial conglomerate which manufactures weaponry, EADS has been subjected to criticism. Alleged wrongdoings include:
  • The delivery of weapons to non-NATO countries without due consideration for the political situation and the economic consequences and to countries where there exists an on-going arms race.
  • Using bribes in order to further sales in South Africa.
  • Engendering the threat of a trade war when specific bids are rejected (e.g. the case of the Republic of Korea's F-15K Strike Eagle competition).
  • Filing of a lawsuit against a country's government when a competitor's product is chosen over theirs. *

As a result of these criticisms, the Norwegian Petroleum Fund’s Advisory Council on Ethics recommended, in 2005, that the Ministry of Finance should exclude this company from the Petroleum Fund, arguing that EADS manufactures "key components for cluster bombs". As a result, since 2 September 2005, EADS and its sister company EADS Finance BV have been excluded from the investment portfolios of the Norwegian Government Pension Fund.

Alleged Insider Dealing

News reports in June 2006 have focussed on possible insider dealing at EADS. Joint CEO Noël Forgeard made a 2.5 million Euro profit on the sale of EADS shares, just weeks before news of A380 delays was released.

See also

References

External links

Aerospace companies | International aircraft manufacturers | Aircraft engine manufacturers | CAC 40 | Defence companies | Companies of France | Companies of Germany

EADS | EADS | EADS | European aeronautic defence and space company | EADS | European Aeronautic Defence and Space Company | European Aeronautic Defence and Space Company | EADS | EADS | EADS | Европейский аэрокосмический и оборонный концерн | EADS | EADS

 

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