EADS To Limit Capital Expenditures In 2009

Jan 13, 2009
Robert Wall/ Newport, Wales wall@aviationweek.com



The global financial crisis and need to provide customer delivery financing to Eurocopter and Airbus customers is causing EADS to focus on preserving its cash position.

Although the company has a strong cash balance, with around EUR9 billion available, EADS CEO Louis Gallois says "protection of cash in such a crisis is our first priority."

That position means, in part, that major acquisition opportunities will not be taken advantage of until the financial crisis passes, Gallois says. Already, EADS last year passed at the last minute on a major U.S. acquisition in the defense field, which would have been valued at around $1 billion. EADS officials didn't identify the target.

Gallois says he wants the company to get back into the acquisition business as soon as possible, though.

Other capital expenditures will also be tightly controlled, he asserts.

Gallois indicates that one reason EADS is keeping such a close watch on its cash is to provide customer financing. Some buyers "have difficulty to find financing for their acquisitions," he says. "We are ready to increase our financing support to our customers," he notes, but adds "we will do it cautiously."

The top priority is to make sure no 2009 delivery positions are without customers, so financing will focus on ensuring that doesn't happen, he says. The backlog at Airbus and Eurocopter is being monitored closely, with Gallois confirming that adjustments to production rates could come in the second half of the year if they are needed.

Also due later this year is a decision on whether to revise EADS's legal setup into a single, European company, which should reduce costs.

A team is currently working on an action plan, but Gallois signals it will not be an easy process and will involve talks with unions and institutional

Photo of EADS CEO Louis Gallois: EADS