EADS set to reorganize, may change name to Airbus

Thu Jul 18, 2013 5:31pm EDT
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By Tim Hepher and Sabine Siebold

PARIS/BERLIN (Reuters) - EADS is set to reorganize some business units as part of a strategy review that could also see the European aerospace group change its name to Airbus, people familiar with the matter said on Thursday.

The shake-up aims to provide greater discipline and cohesion to disparate defense activities, but EADS is expected to abandon a long-term goal of balancing defense and commercial revenue after last year's failure of merger talks with BAE Systems (BAES.L: Quote).

The overhaul, to be discussed by the board at end-July, will try to balance investors' enthusiasm for Airbus jetliner revenue with the backstop of defense, but is likely to strike a pragmatic tone as Europe remains mired in uncertainty and debt.

"There will be some big announcements, but not necessarily a lot of strategy in this review. It is more to do with structure and profitability," said a person closely watching the process.

EADS EAD.PA has been under pressure from markets to give greater weight to its commercial operations led by planemaker Airbus, amid stronger than expected orders for jetliners during the downturn as airlines try to lower their fuel bills.

Many fund investors opposed efforts by EADS last year to merge with Britain's BAE Systems, a proposal that was eventually scuppered by political opposition from Germany. After the deal fell through, shares in the company soared.

EADS previously targeted a 50-50 mix between commercial and defense revenue by the end of the decade, but analysts say the failure of BAE talks spelled the end of "Vision 2020". Airbus makes up two-thirds of EADS revenue and is still growing fast.

A shake-up in corporate governance shortly after the collapsed talks gave more power to the company's management, led by Chief Executive Tom Enders who launched a strategy review.   Continued...

Logo of EADS is seen at the European aerospace and defence group EADS headquarters in Les Mureaux near Paris January 12, 2011. REUTERS/Charles Platiau