REUTERS SUMMIT-EADS sees flat to lower defense revenue
(For other news from Reuters Aerospace and Defense Summit, click on www.reuters.com/summit/Aero13)
By Alwyn Scott
WASHINGTON, Sept 4 (Reuters) - EADS is opting out of bidding on some U.S. weapons programs as it adjusts to reduced U.S. government defense spending, and it expects flat to lower revenue in its defense business in coming years as the spending cuts deepen, a senior executive said on Wednesday.
"There's no doubt that the government sector is flat to declining and we're forecasting the same," Sean O'Keefe, chief executive of EADS North America, told the Reuters Aerospace and Defense Summit.
International sales may compensate somewhat, he added. But the company is girding for a tough year for its defense business even as its Airbus commercial jetliner business books a record backlog of orders, including a sale of 40 jets to Delta Airlines , announced Wednesday, a deal worth $5.6 billion at list prices that ends nearly two decades of exclusive Boeing sales to the U.S. airline.
O'Keefe, speaking at the Reuters office in Washington, D.C., said the U.S. bidding process has slowed in response to budget cutting and sequestration, which he called "a self-inflicted fiscal challenge that nobody's ever seen before" that was "created to be as disruptive and difficult as anything that could be constructed."
He said EADS is targeting defense contracts that allow it to build on core strengths, while avoiding far-reaching programs that might not pay off. For example, the U.S. Army's vertical lift aircraft program.
"I wouldn't say that we're walking away from things, we're just being much more specific about the core competencies," he said.
Follow Reuters Summits on Twitter @Reuters_Summits (Reporting by Alwyn Scott; Editing by Phil Berlowitz)
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