Activist fund TCI backs EADS boss as defense cuts loom
By Tommy Wilkes
LONDON (Reuters) - The head of hedge fund TCI said he is backing the boss of aerospace giant EADS EAD.PA in his "aggressive" approach to slash costs and grow profit, and expects management to announce further cuts in its defense unit soon.
Chris Cooper-Hohn, whose TCI owns more than 1 percent of EADS' share capital, said he believes EADS is set to benefit as its management focuses on commercial aircraft production and shields the firm from undue meddling from government shareholders in France and Germany.
"We believe the company is in the process of doubling and then tripling its profitability," Cooper-Hohn told an audience at the Ira Sohn conference in London on Thursday.
Cooper-Hohn, an aggressive activist investor with a record of successfully taking on high-profile executives, said EADS had a $1 trillion backlog of orders, would improve margins as its pricing power strengthened, and was in a better position to cut costs now negative political influences had been neutralized.
"Governments are just about the worst owners of companies you can imagine," he said.
EADS announced in July it would combine its defense and space subsidiaries and rename the group after its Airbus aircraft making brand, starting from January 1. The restructuring is due to be completed by July 2014.
The company is planning to cut jobs and costs in its defense division, German newspaper Sueddeutsche Zeitung quoted CEO Thomas Enders as saying earlier this week.