EADS Essay

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The European Aeronautic Defence and Space Company (EADS N.V.) is the leading European company for aeronautic, defense, and aerospace services. EADS was set up in 2000 as a public limited-liability company under Dutch law, and it came from the merger  of DaimlerChrysler  Aerospace  (Germany), Aerospatiale  Matra  (France),  and  CASA (Spain). EADS is the  owner  of Airbus,  an  aircraft  manufacturer,  which represents  the core business of the company.  EADS is also a world leader in the production  of helicopters,  space launch  vehicles, missiles,  military  aircraft,  satellite,  defense  systems, and electronics.

EADS is legally seated in Amsterdam  (Netherlands),  with  the  company’s  head  offices located in  Germany  (Ottobrunn and  Munich)  and  France (Paris), and locations and offices distributed  around five continents.  On December 31, 2007, the number of employees was 116,493.

Its  shareholding  structure   as of June  30, 2008, is as follows: Sogeade (French company formed by Lagardère and the French state) owns 25 percent of the shares, German  Daimler controls  23 percent  of the shares, and the Spanish state company  SEPI is the owner of 5.5 percent  of the capital of the company. These companies together  control 53 percent of EADS, and  they have established  a contractual partnership in order  to  run  the  company.  The 47 percent  of the remaining  shares represent  the free float of the  company.  EADS is listed in the  stock exchanges  of the  countries  of origin  of the  main shareholders:  the   Paris,  Frankfurt,   and   Madrid Stock Exchanges.

The company is structured in five divisions, each of them responsible for one business unit: Airbus, Military Transport Aircraft, Eurocopter, Defence & Security, and Astrium.  The aircraft manufacturer Airbus is a fully owned subsidiary of EADS, in charge of the production of aircraft. The headquarters of the company are located in the French city of Toulouse. The history of Airbus, from its origins to today, parallels that of European economic and political integration, with moves forward, periods of stagnation, and slight backward steps.

In 1967, the United Kingdom, France, and Germany signed a memorandum of understanding to launch a new European  aircraft that  was due to reduce the dependence  of European  airlines  on  American  aircraft and which could eventually compete worldwide with American Boeing, who was at that time the major manufacturer able to produce commercial aircraft on a profitable and sustainable basis. The final agreement  (1969) was ratified only by the French and German ministers, though it also involved the British and the Dutch.  Other  countries,  such as Spain, entered  the consortium  in subsequent years.

From its early stages Airbus has striven to seize the leadership of aircraft manufacturing from American Boeing. This commercial  battle has been one of the most interesting business issues in the aviation industry of last quarter  of the 20th century,  with success for the Europeans in the last years, although this situation could be reversed.

At  present  Airbus  manufactures   five families of aircraft: A300/A310,  A320, A330/A340,  A350, and the largest passenger aircraft in the world, the Airbus A380. The final launch of Airbus A380 was preceded by  several  delays  with  regard  to  scheduled  delivery dates, which caused an increase in costs due to compensations to clients, and gave rise to a financial scandal involving top management  and shareholders. These were suspicious of executing trades before the delay of the Airbus A380 was announced  to the market in June 2006.

The  Military  Transport  Aircraft  division  is  in charge of the production of the A400M, a military air transport developed at the request of eight European NATO members. First delivery of the plane is due in 2010. Eurocopter is the world’s largest helicopter producer of both civil and military aircrafts. The Defence & Security  division  provides  military  aircraft,  airborne  weapons  and  defense systems, and  electronics. Its most renowned product is the combat aircraft Eurofighter.

Astrium  is the company providing space services and products, among which are the Ariane launchers, used in space transport, and the satellite navigation system, Galileo, which is destined  to compete  with American GPS.

According to company financial statements, the EADS group reported in 2007 a total revenue of 39,123 million euros (US$58,685 million, approximately), which was allocated among  its divisions as follows: Airbus,  64 percent; Military  Transport Aircraft,  3 percent; Eurocopter,  11 percent; Defence & Security, 14 percent; Astrium, 9 percent. The company in 2007 lost 33 million euros mainly due to the unfavorable euro/dollar  movements,  the  negative impact  of the revised  delivery schedule  for  the  A400M, and  the costs of the new A350.

Bibliography:     

  1. Airbus, airbus.com   (cited   March 2009); EADS, www.eads.com (cited  March  2009);
  2. Manfred Knappe, On the Wings of Time: A Chronology of EADS (Résidence-Verl, 2006).

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