The world’s biggest civil helicopter maker, Eurocopter, said yesterday that a slump in corporate and VIP spending would force it to cut costs though its 16 000 staff would be spared compulsory redundancies.
The Airbus sister company said it planned €200 million ($299.4 million) (R2237 million) of annual cost cuts from 2011, and will slice inventories to improve cash flow and retrain or redeploy some staff.
“Eurocopter has to save money in the short term in order to get through the crisis period,” the company said.
Shares in parent EADS pared earlier losses and were down 0.2 % at €13.76 at 0950 GMT, outperforming a weaker market overshadowed by mixed corporate earnings.
Analysts had expected Eurocopter Chief Executive Lutz Bertling to attack costs after the financial crisis hit demand for civil helicopters.
Spending by VIPs has fallen, mirroring a slump in business jet orders driven partly by public anger over corporate perks. But demand from oil and gas companies has remained relatively robust as energy prices rebound.
“The main reason (for the cost cuts) is the drop in orders on the civil side, which have been dramatically impacted by financial crisis,” a spokesperson said.
He said there would be no lay-offs or production cuts under the plan dubbed SHAPE.
“The objective is to reach the target of €200 million of cost savings by the end of 2011,” he said.
This includes a contribution to an existing EADS savings plan known as Future EADS, which targets a group-wide total of €200 million of savings through better integration between divisions from planemaker Airbus to space by the end of 2012.
Eurocopter competes with Italy’s AgustaWestland, owned by Finmeccanica , Bell Helicopters, a unit of US-based Textron, and United Technologies Corp’s Sikorsky in a global market worth more than $6 billion (R44 billion) a year.
It also builds military helicopters such as the Tiger and the partially delayed NH90, but analysts say the shrinking portion of civil sales has put overall pressure on its margins.
Eurocopter controls half the global civil market with models such as the Ecureuil and Super Puma and this segment represents about half of its €4.4 billion (R49 billion) in annual sales.
Cost cuts will include measures to improve productivity but the company said it would still boost research and development spending in 2010, although by less than the 25 % increase expected for 2009.
Formed from a Franco-German merger in 1992 and folded into EADS at the turn of the decade, Eurocopter made up 10.3 % of both revenues and operating income at EADS in 2008.
Eurocopter is EADS’s third largest business behind Airbus and Defence and Security, and roughly the same size as its Astrium space business.
Pic: Eurofighter plane