Airbus Defence and Space, growing 'kind of dirty business'

May 27 the annual shareholders meeting of Airbus (formerly EADS N.V.) the biggest military and space company in Europe will take place in Amsterdam. The Campagne tegen Wapenhandel has a long history of protests at the event. These protests, among much more, created an atmosphere which was recently described by Airbus CEO Tom Enders: “Working in the defence industry has a bad reputation in several European countries. Many see it as a kind of dirty industry.” Despite this bad reputation and a shrinking military market in Europe revenues grew considerably in 2013. How?

Airbus Group (EADS In 2013)	FY 2013	FY 2012	Change
Revenues, in millions	59,256	56,480	+ 5%
thereof defence, in millions	12,076	11,605	+ 4%
Airbus Group 2013 Results: Another Year Of Operational And Financial Improvement

Airbus is profiling itself in North America, “a market to big to ignore,” according to CEO Enders. Recently Enders spoke at the Atlantic Council in Washington, where he presented Airbus' U.S. efforts and promised new acquisitions at a meeting awash with the elite from U.S. Defence circles. He praised the US for it's procurement policy, although could not resist mentioning several times how much he would have liked to sell tanker aircraft to the US armed forces, a deal however which, after a long struggle, went to arch rival Boeing. Enders used this high level podium foremost for his favorite topic: to fire at European governments and institutions who are not supportive enough to the military production of Airbus. Earlier Enders criticized the European capitals not enabling Airbus to develop a mature drone capability. At this Washington meeting, Tom Enders received the Atlantic Council Distinguished Business Leadership Award.

Airbus still is a major participant in the French nuclear force. The company also plays a major role in conventional arms exports. European and North American countries are the traditional customers. But Airbus makes clear that its key markets are broader, and include Australia, Brazil, India, China, Middle East and Russia (the latter obviously a problematic market at present).

Saudi Arabia, which is exchanging oil revenues for weaponry, is a prominent client. It is close to buying Eurofighter Typhoon jets (EFA, Airbus builds the EFA together with BAe Systems and Finmeccanica) a multi-billion dollar arms sale deal.

Riyadh is a controversial destination for European arms export, notably for Germany. This was clearly visible during the last arms export policy debate in Parliament and also in a statement of the German vice prime minister Sigmar Gabriel who intents to sanction the sale of battle tanks to Saudi Arabia. Gabriel also said he intents to stop an Airbus arms deal to Saudi-Arabia; General Dynamics had chosen Airbus daughter Optronics to deliver 2000 Precision measuring instruments for target acquisition build in new light armoured vehicles (LAV) for Rhiyadh as part of a ten year $10 billion agreement with General Dynamics’ Canadian subsidiary. The Airbus deliverance is worth €500 million. Not everybody is convinced of Gabriel's resolve and fear that no concrete steps will be made. But the German Handelsblatt noted frustration coming out of the Airbus offices in Germany anyway.

On sales to the Middle East, Campagne tegen Wapenhandel wrote about sales to Qatar. Newest on the Airbus military equipment to the Middle East is a CASA C-235 aircraft purchased second hand from Spain. The plane was converted to gunship configuration for the Royal Jordanian Air Force, opening a new market. It was shown at the Special Operations Forces Exhibition & Conference (SOFEX) early May in Jordan.

The 12 billion plus revenues of Airbus on arms in 2013 are made across the world, but China, the other important growth market, is often mentioned, mainly because of helicopter sales. Besides direct gains from the Chinese military budget, Airbus earns from the arms race in East and Southeast Asia, which is a reaction to the growing military spending by China. One of the examples is a sale to the Philippine Air Force (PAF). It is expected PAF receives, within two years time, among aircraft from other companies, three medium EADS/CASA-Airbus Defence and Space C-295 medium lift aircraft. Asia in general is an important market for U.S. companies but also for European ones like Airbus.

Airbus' sales are in both growing and shrinking markets all around the world. Combined they resulted in a 4% net military revenue growth.

Written for  Campagne tegen Wapenhandel