October 20, 2009 / 2:35 PM / 10 years ago

UPDATE 2-Former NASA leader to run EADS North America

* O’Keefe was former Navy secretary

* Crosby helped broker tanker team with Northrop

* EADS looking for significant acquisitions (Recasts with confirmation; adds quotes from news conference)

By Andrea Shalal-Esa

WASHINGTON, Oct 20 (Reuters) - Europe’s EADS EAD.PA said on Tuesday former NASA administrator Sean O’Keefe will become chief executive of its North American operations as part of the company’s continuing drive to expand its U.S. footprint.

Ralph Crosby, current chief executive of EADS North America, will stay on as nonexecutive chairman, and run the company’s drive with prime contractor Northrop Grumman Corp (NOC.N) to win a multibillion U.S. Air Force order for new refueling planes, the company said.

EADS Chief Executive Louis Gallois, in Washington to announce the expansion of the company’s North American leadership team and meet with U.S. lawmakers, said of the move: “It’s a reinforcement of EADS North America because we have big ambitions in the U.S.”

He said the company also continues to screen “significant targets” for possible acquisitions in the United States, although such deals are not expected in the near future.

He said EADS still wants to make significant acquisitions, but for the moment remains focused on maintaining sufficient cash to weather the continuing economic crisis.

“We have to be sure that the protection we get from our cash position is solid enough, robust enough,” Gallois said. For now, he said the company’s board is taking a “very cautious” approach, but he said EADS still hopes to complete significant acquisitions in the future.

“We want to be considered as American citizens in the United States,” Gallois said. “We want to make the United States our domestic country, as we are in France, in Germany, in the U.K. and in Spain.”

EADS North America, created in 2002, has tripled its sales over the past six years under Crosby’s leadership, winning a key contract to sell over 300 helicopters to the U.S. Army — and the tanker deal with Northrop, although it was later canceled.

EADS is also the single largest international buyer of U.S. aerospace products, consuming about $11 billion each year and supporting about 200,000 jobs in the United States, he said.

O’Keefe, a former Navy secretary who headed the National Aeronautics and Space Administration from 2001 to 2005, said the EADS job is “an extraordinary opportunity” he could not pass up.

O’Keefe, who has headed Washington operations for General Electric Co’s (GE.N) aviation unit since March 2008, said his broad Washington contacts should serve him well in the new job.

GE makes the engine for the Airbus A330 refueling aircraft that EADS and Northrop offered in the last tanker competition.

Northrop and EADS won a projected $35 billion contract in February 2008, but the Pentagon later terminated the deal after government auditors upheld a protest filed by Boeing Co (BA.N).

The Air Force last month announced the draft terms for a new competition between the two rival teams, whose governments are fighting a transatlantic battle over alleged subsidies.

Gallois said a recent interim ruling by the World Trade Organization against the European Union was only preliminary, and appeared to have “mixed” results. If the EU’s case against alleged subsidies by Washington also resulted in a mixed ruling, that might pave the way for a compromise, he said.

Loren Thompson, defense analyst with the Lexington Institute, said Crosby, a former senior Northrop executive before he joined EADS, played a pivotal role in brokering the teaming agreement between Northrop and EADS, given his previous role as head of Northrop’s aircraft division.

“Ralph Crosby is the reason that EADS was able to join with Northrop in offering a future tanker to the Air Force,” he said. “He had the relationships to put a team together.”

Gallois said EADS remains concerned that Boeing was given sensitive pricing data after Northrop and EADS won the last competition, and wants access to similar Boeing data to “level the playing field.”

But he said he does not view the issue as a deal-breaker.

Pentagon officials said they reviewed the pricing issue before releasing draft rules for the next competition, and did not believe it would impair the competition. (Reporting by Andrea Shalal-Esa, editing by Gerald E. McCormick, Dave Zimmerman)

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