The head of defense and aerospace at Airbus talks about the future of the European aviation firm's troubled Eurofighter jet and A400M troop transport, and why the company is selling its military electronics division.
WHY IT MATTERS:
Airbus lacks critical political support in Germany for selling fighter jets to other countries.
-- Airbus Defence and Space is looking to sell its military electronics division.
-- The four-engine turboprop A400M Atlas military transport was plagued by early delays and cost overruns, and a fatal crash in May 2015.
-- Delivery of Eurofighter Typhoon fighter jets was temporarily suspended this week following the discovery of a manufacturing flaw in the fuselage involving rivet holes that had not been properly filed off.
The Airbus Defence and Space complex near Munich is undergoing renovations for the first time in 30 years. The company itself is undergoing a renovation of sorts too. It announced last year that it would sell several business units, including military electronics, to focus on its core areas of space, military aircraft and missiles.
Bernhard Gerwert, chief executive of the military aircraft and satellites division, has been working at Germany’s largest arms manufacturer since 1979, and is a confidant of Airbus Chief Executive Tom Enders. He sat down with Handelsblatt to explain why the Eurofighter, despite its problems, will be around for a long time to come, and how the A400M military transporter can expect a growing customer base in the Middle East and Asia.
Handelsblatt: Airbus is selling part of its defense business in Germany. Is it no longer possible to make money in armaments?
Bernhard Gerwert: Two years ago, we reorganized our business and combined the defense and space sectors. They have €14 billion ($16 billion) in revenues and 40,000 employees. Now we are letting go of one sphere of business with a little less than €2 billion in sales, about half of which is in the defense sector. We are retaining the largest share, because we’re convinced that we will continue to be successful in the field of armaments.
Handelsblatt: Nonetheless you are giving up key competencies in defense electronics, including radar, target recognition and flight control systems.
Bernhard Gerwert: Only a small segment of our production goes into our own airplanes and helicopters. The major share goes into the programs of our competitors. In comparison to our international competitors, especially in the United States, we are simply too small. So it makes more sense to get out of that field and concentrate on building airplanes, rockets and satellites.
Handelsblatt: Do you already have a buyer? Rheinmetall, the military technology and auto parts supplier, has made an offer.
Bernhard Gerwert: We have many interested parties — purely financial investors and also strategic bidders. The German government is closely involved. It’s in the federal government’s interest that certain technologies and locations remain in Germany. (end of excerpt)
Click here for the full story, on the Handelsblatt website.
Click here for our related July 6, 2015 Op Ed: “How Long Will Airbus Stick with Defense?”