There is some good news from Cassidian, however. Its order intake had risen to €5 billion in 2012 from €4.2 billion in 2011, thanks mainly to the Eurofighter and missile export business, while the Omani order for 12 Typhoons “is yet to be recorded” in the company's orderbook.
Cassidian's struggles are not reflected in other parts of EADS' defense business. Airbus Military reported a 90% growth in earnings from €49 million in 2011 to €93 million for 2012, although revenues were down 15% related to lower A400M and A330 MultiRole Tanker Transport revenues.
Eurocopter's military business also suffered slightly when it received a €100 million charge in fourth-quarter 2012 related to ongoing renegotiations over contracts for the NH90 and Tiger helicopters for the German government and NH90 deals for other nations such as Portugal.
However, earnings increased by 20% to €311 million, the second-best posting in the EADS group behind Airbus. Revenues at Eurocopter were up 16% to €6.26 billion, driven mainly by increased MRO activities through the Vector Aerospace business purchased by Eurocopter in June 2011, and from higher revenues from the sale of larger helicopter models such as the NH90 and the EC225/725 Super Puma models, even though deliveries were slightly down from 2011, with 475 aircraft sold in 2012 compared with 503 in 2011.
Much like its public relations “spin” on defense, EADS is also attempting to return to a normal relationship with governments, particularly Germany's. When Berlin blocked the BAE merger last year, EADS and German administrators barely communicated for a while. Now Enders is adopting the “charm offensive,” highlighting the indirect benefits of the aborted merger. He argues that the failed attempt to unite with BAE Systems paved the way for the most significant governance change since EADS' creation in 2000. “The old shareholder pact is resolved, the influence of governments is greatly limited,” he points out. “The new structure has been designed with one thing in mind: operate EADS as a normal company.”
With the new governance in place, core shareholder influence will be more limited than in the past, but Germany will also become a direct EADS shareholder for the first time and, with France and Spain, will hold a combined stake of close to 30%. Enders has always argued that governments should not be shareholders in EADS.
Enders has again changed the tone of his public statements: “Governments will always have significant influence regardless of whether they are shareholders,” he now says. In his view, the U.S. could easily be able to keep Boeing from merging with another company.
But perhaps the key lesson EADS has learned from the failed merger is that “there is no European defense. We are far away from it. That is a major lesson for us as an industry which needs more consolidation.”
The outlook on the commercial side is much better. Demand for the new A350 is such that Airbus is already looking at adding to production capacity, even though the aircraft has not yet been flown. Airbus sales chief John Leahy noted the industry's interest in the aircraft when he presented Airbus's Asia outlook in Singapore. “I'm happy to hear from John that he is bullish about the A350,” Enders says jokingly. But EADS has not yet decided to add production capacity. He concedes that the program is still “inherently risky, particularly in the phase ahead of us” and “that there is no room left in the schedule.”