HAMPSHIRE, England–Securing the KC-X tanker contract remains the European Aeronautic and Space Co.’s (EADS) number one priority, but the company’s vision for doubling revenues by 2020 and balancing defense and commercial activities is not dependent on the outcome of the disputed tanker deal, top executives said.
“First, we will get the tanker, because we have the best airplane,” Louis Gallois, EADS CEO told reporters at an all-day briefing here Saturday. “The increased footprint strategy is not linked to one deal or another…we want to be in the U.S.”
Gallois and his top lieutenants were abundantly clear that EADS still has sights set on acquiring an American defense firm that is large enough to give EADS better access to the huge market, prime contractors and technologies there.
All expressed confidence that the Northrop Grumman [NOC]-EADS tanker offering would win in a pending recompetition. They said the platform is more capable, more mature and less risky than the solution offered by Boeing‘s [BA] team.
Some held back more than others.
“Our boom, our [refueling] system is being tested every day in Spain, both dry and wet contacts,” Gallois said. “There is no news on the boom of our competitor,” he added.
Boeing said it was adding a separate tanker briefing to its lineup in the coming days at the Farnborough International Air Show and yesterday deferred comment on the KC-X situation or its competitor.
According to John Young, chief operating officer of EADS North America, the Pentagon has been faster to recognize the implications and realities of the new global environment of ‘glo-opetition’ than many politicians. “Congress is still learning,” he said.
“The U.S. military always buys the best products…[choosing] things that best protect the men and women of the U.S. armed forces and those of our allies,” he said.
“This should be seen as a small ‘r’ recompete,” Young said. The GAO sustained only seven of 111 protest points and in some of those points, industry has no play, he added. “Much is up to the military…past performance won’t change and things that haven’t changed won’t be reevaluated.”
Young described the Pentagon’s schedule to finalize the deal “sporty” and thought it might end up going past the end of the year into January or February. “But not beyond that…the process will be speedy and efficient,” he added.
When asked if the company was considering opening an A-330 freighter line in Mobile, Ala., without a tanker win, Airbus CEO Tom Enders said no, dispelling some speculation. “We are business people and to take a big decision we need a business case,” Enders said. “Opening a freighter line without the tanker is not a convincing business case, but once we get the tanker we will move [A-330] freighter production to Mobile,” he added.
While the EADS executive presentations included occasional jabs toward its archrival, Gallois said he admired Boeing. In one respect, he wants his company to imitate Boeing’s 50-50 commercial to defense business ratio.
Gallois’ Vision 2020 includes growing defense through acquisition and winning big contracts. He intends to boost production from outside Europe and increase the share of European suppliers that EADS is currently paying in dollars.
Restructuring challenges, difficulty shedding some infrastructure and a weak dollar are masking the company’s success, Gallois said. “e are still the only company able to compete with the big three in the U.S. We continue to be underestimated, sometimes by ourselves, but for the first time we are more and more integrated…and transparent, and have a clear vision of where we want to go.”