EADS targets US acquisition

Paris: Staff at the European Aeronautic Defence and Space Company (EADS) have been told the aerospace group will identify two acquisitions this year in defence, security or services including at least one in the US, according to a memo issued by the group.

The aim is part of a set of targets distributed internally as the aerospace group faces a backlash in Congress over a deal to supply the US Air Force, and days before annual losses are expected to highlight the group's exposure to a weak dollar.

In the memo, Chief Executive Louis Gallois makes delivering on financial promises and beefing up industrial reliability the group's number one priorities for 2008 as its Airbus civil planemaker unit reels from costly delays to its A380 superjumbo.

Also high on his 10-point list of priorities for 2008 is a call to finalise the full or partial sale of half a dozen Airbus factories, opposed by French and German unions, and to ensure the A380 is delivered according to its revised production plan. Staff are also urged to stabilise the A400M European heavylifter programme and the naval NH90 helicopter, both facing delays of up to a year, and secure a third tranche of production of the multi-national Eurofighter, due to start from 2012.

The memo was distributed internally in the past week and its existence was confirmed by two sources who asked not to be named because the list has not been released outside the company. A spokesman for EADS declined to comment. Item number six on the 2008 priorities list proposes "two acquisition projects in the field of defence, security or services to the board, at least one of which is in the United States".

Gallois' strategy chief said in January EADS was looking for a mid-sized aerospace services company worth around $1 billion. But the memo appeared to be the first time a precise number and timeframe had been placed on the company's shopping list.

The goals for 2008 are designed to kickstart a plan called Vision 2020 which aims to reshape Europe's top aerospace company as a global player over the next 12 years. EADS is keen to cut its heavy reliance on cyclical demand for airliners to achieve a better balance with defence.

Executives are also desperate to ease the choking effect on the group's fin-ances of a weak dollar, saying recently that the company's survival was at stake - though part of that rhetoric is seen as a bid to convince European unions over restructuring.

In its biggest breakthrough in defence outside Europe, EADS and partner Northrop Grumman recently won a $35 billion order for aerial refuelling tankers dubbed KC-45A. But backers in Congress of rival Boeing are trying to block the deal.

Gallois told staff in the memo that one of the company's objectives in 2008 would be to "position EADS in the US defence and security markets, and as a major step, ensure successful start of the KC-45A tanker programme".

The tanker design is based on the fuselage of the Airbus A330 passenger jet, which is built in four European countries. Airbus plans to make the sections in the usual factories but transport them to a new plant in Mobile, Alabama, for assembly.