EADS CE warns of defence cut domino effect


EADS Chief Executive Louis Gallois has warned European governments not to cut budgets for transnational military projects to quash rising deficits. “We tell our customers in the governments: We understand that you have to save money. But don’t destroy the basis of your industry,” Gallois told German newswpaper Handelsblatt in a recent interview.

German Defence Minister Karl-Theodor zu Guttenberg has said that steep spending cuts are needed considering Berlin’s dire fiscal budget. France has also said it was considering defence spending cuts. French media had reported that the Paris government was targeting 2-5 billion euros of savings from its defence budget over the next three years. “The situation should not lead to different national priorities having the effect that every country cuts spending in different joint defence programmes. That would add up to a domino effect for the industry,” Gallois said.

Gallois said he expects EADS to resume delivery of Tiger attack helicopters to Germany after fixing problems that had caused Berlin to halt its purchase of the helicopter last week. “We will deliver two new machines to the German military test pilots in July. If the tests have a positive outcome, we can deliver five Tigers this year,” he said. Germany on May 25 suspended its 3 billion euro purchase of the Tiger, potentially delaying delivery to its forces in Afghanistan until the end of 2011.

The fresh setback, coming just ahead of the Berlin air show, came on top of delays to the A400M military transporter and the NH-90 multi-role helicopter, both of which have strained industrial relations between EADS and German defence chiefs. Wiring was also blamed for delays to the A380 superjumbo built by Eurocopter sister company Airbus, but company officials insist there is little comparison between the two projects. EADS has made more reliable delivery a top priority.