PARIS (Reuters) - EADS EAD.PA will combine its defense and space units and take the name of its flagship brand Airbus, adopting a similar structure and style to arch-rival Boeing (BA.N) as it targets higher profits.
Nine months after abandoning attempts to merge with UK arms firm BAE Systems (BAES.L), Chief Executive Tom Enders confirmed decisions that would see civil jets remain a “growth engine” popular with investors, who pushed EADS shares to new highs.
Speaking after EADS also confirmed an increase in the Airbus order target and unveiled upbeat mid-year earnings, Enders did not rule out job cuts in the group’s 45,000-strong defense and space operations, which will be based in Germany.
He said the reorganization would “take costs out, increase profitability and improve our market position”.
In a further sign of potential job cuts, EADS warned the move could lead to restructuring charges later in the year.
However, it effectively deferred politically sensitive decisions until after German elections in September by promising to carry out a more detailed review in the second half.
“The German government will work closely (with EADS) during the upcoming restructuring process and will place great importance on Germany’s interests as an industrial location,” Economy Minister Philipp Roesler said.
EADS was formed in 2000 from a merger of French, German and Spanish assets that incorporated passenger jetmaker Airbus, founded three decades earlier and now a global rival to Boeing.
The name EADS - originally European Aeronautic, Defense & Space Co - was never widely recognized and the group has long discussed changing its name to Airbus.
As previously reported by Reuters, EADS will be called Airbus Group and and will combine its defence and space activities in one Munich-based division together with Airbus Military transporters, currently twinned with passenger jets.
Eurocopter, the world’s largest commercial helicopter maker, will be renamed Airbus Helicopters.
Powered by Airbus commercial demand, which offset lower helicopter and space earnings, second-quarter EADS operating profit rose 23 percent to 887 million euros on revenue of 13.945 billion, up 3 percent. Airbus makes up two thirds of sales.
Analysts were on average expecting second-quarter operating profit of 839 million euros on revenue of 13.693 billion.
EADS raised the 2013 order target for passenger jets by 25 percent to more than 1,000 aircraft, as reported by Reuters earlier this month [ID:nL6N0FP1U2]. Other targets were unchanged.
Shares in EADS rose 2.2 percent to 45.23 euros by 1038 GMT.
Airbus is battling to regain leadership of the $100 billion annual jet market after Boeing (BA.N) grabbed the top spot in both orders and deliveries last year.
EADS hopes its decision to unite under a globally recognized brand will galvanize the rest of its businesses from.
Driven by emerging markets, commercial aerospace demand has been remarkably strong in the past 2-3 years, providing a haven for investors in a shaky global economy.
The new order target puts Airbus on course to beat its 2012 gross order tally of 914 jetliners. Industry sources say business in the pipeline suggests it could reach 1,200 orders.
EADS aims to increase operating margins to 10 percent by 2015, from 5.6 percent in the first half of this year.
That would bring EADS roughly in line with Boeing, though the comparison is blurred by accounting differences that allow the U.S. company to spread some costs over a longer period.
Enders said testing for the A350, the newest Airbus jet, was going “very, very well” but the project remained challenging.
($1 = 0.7547 euros)
Editing by James Regan and Anthony Barker