EADs to cut 5,800 jobs as part of major overhaul
December 9, 2013 By The Associated Press
Dec. 9, 2013, Paris, Fra. - European air and defence company EADS, the parent company of Airbus, said Monday it is cutting 5,800 jobs over the next two years as part of a major overhaul to reduce costs and refocus on civil aviation.
The company said in a statement that the jobs would be eliminated
from its corporate and space and defence divisions by the end of 2016.
The many space and defence divisions will be combined into one arm, to
be called Airbus DS.
EADS, which is changing its overall name to Airbus, is also
getting rid of its corporate headquarters, just outside Paris, and
moving staff to another site, also outside Paris.
The company had once sought to
become less dependent on its civil aircraft business with a goal of
increasing its defence business, maker of the A400M European freighter,
to around half of total revenue. A major part of that plan was a
proposed merger with British defence company BAE Systems. The merger
would have created a company with a market value just shy of Airbus
rival Boeing's and one with a more equal balance of civil aviation and
defence. Currently, the civil aircraft business makes up almost 70 per
cent of EADS' group sales.
Objections from the French, German and British
government scuttled the merger, and the global economic downturn, which
forced governments to drastically cut military spending, has made the
defence business a much more difficult one.
Meanwhile, as the emerging world takes to the
skies, the civil aircraft business is thriving.
Boeing, for instance,
forecasts that over the next 20 years the global demand for new
airplanes will exceed 35,000 aircraft, valued at $4.8 trillion.
EADS' net earnings rose 45 per cent in the third quarter, to 436 million euros.
But CEO Tom Enders said Monday that the cuts
were necessary if the company is going to compete and attract defence
and space customers in growing markets outside Europe, which is not
doing as well.
"We need to cut costs, eliminate product and
resource overlaps, create synergies in our operations and product
portfolio and better focus our Research and Development efforts," he
EADS said it would offer up to
1,500 of those laid off positions at Airbus or Eurocopter. Another 1,300
positions will be eliminated by non-renewal of temporary contracts.
After offering voluntary plans to employees, EADS expects to have to
make 1,000 to 1,450 outright layoffs.
The company, which has most of its operations in
France, Germany, Spain and Britain, did not specify where the cuts
would be made.
Unions in France had warned the restructuring
would entail layoffs and called on the French government to intervene,
saying that the weakening of EADS would have consequences for the entire
French economy. French industry has been hit especially hard by the
crisis, but was in decline even before the global recession hit. The
loss of manufacturing jobs is one reason its unemployment rate is so
high, currently at 10.9 per cent.
"The aeronautical, space and defence
sector is a major asset for national industry, and we will not accept
that it is weakened for reasons of short-term profitability," unions
that represent EADS workers wrote in a letter to the prime minister last