EU needs better coordination to avoid BAE/EADS repeat-Safran CEO

LISBON Fri Oct 12, 2012 12:09pm EDT

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LISBON Oct 12 (Reuters) - The European Union must improve political coordination around the aerospace industry to avoid events like Wednesday's collapse of the merger between defence groups BAE Systems and EADS, the president of the sector's European association said on Friday.

Jean-Paul Herteman, chief executive of French aerospace group Safran, said the sector has room for consolidation and its outlook remains robust.

"Last week has been frustrating, not to say more, but it's one week in a longer process that we have to continue to assess," Herteman told Reuters on the sidelines of the annual convention of the European aerospace and defence industry in Lisbon.

"Beyond competition issues there are political stakes because we are talking about the security and sovereignty of countries. Obviously more political coordination is needed so this does not happen again," he said.

Talks to create a $45 billion aerospace and defence company with a merger between EADS and BAE broke down on Wednesday amid political disagreements over the deal.

"Nothing can happen in this field without support of governments, these actions have to be fully undertaken by all stakeholders," he said.

The Safran CEO also responded to criticism from activist investor The Children's Investment Fund Management(TCI) about what it called Safran's "value destructive" acquisitions.

Herteman said his company had a clear strategy focused on high-technology and its earnings record spoke for itself.

"We do have a strategy. We are the kind of people that we do what we say. We have a strategy of diversifying ourselves within a consistent business model, it is high-tech based on technology differentiation," he said.

"Since 2007 we have been increasing our operating profit by 20 to 25 percent a year and will continue to do so in the years to come. Profit and dividend have been growing and will continue to grow."

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