Armed With New Name, Airbus Group Courts U.S. Defense Market
Officials from Airbus Group — the European aerospace and defense corporation formerly known as EADS — are hoping a new name will help open up sales opportunities with the U.S. military.
"EADS was always a kind of unwieldy thing,” said Tom Ender, Airbus Group’s chief executive during a March 7 roundtable with reporters. "We never succeeded in making it a really strong brand, so it was only logical after this reorganization … that we adapt the Airbus brand, which is known all over the world and is the strongest brand for the entire group."
EADS, or European Aeronautic Defence & Space Co., included holdings such as Airbus, helicopter manufacturer Eurocopter and missile manufacturer MBDA. Officials announced last year that the company would take the name of its most profitable brand, Airbus. It is now made of three divisions: Airbus, Airbus Defence and Space, and Airbus Helicopter.
While the company has long been a giant worldwide in the commercial aerospace market, it is still emerging as a major presence in the U.S. defense industry.
The rebranding will pave the way for Airbus to court Congress, a process that was difficult in the past, said Allan McArtor, chairman and CEO of Airbus Group’s North American unit. EADS was “as a brand, almost a threatening name up on Capitol Hill."
Company officials know that the U.S. defense budget is declining, but it’s still the largest in the world, he added. “We want to be opportunistic about taking our share,” even if it is “a smaller pie.”
One Airbus helicopter, the UH-72 Lakota, is almost certainly going to improve the company's prospects in the United States. The Army National Guard currently flies the Lakota, and the Army’s fiscal year 2015 budget recommended replacing TH-67s with UH-72s.
"It has low acquisition costs, low lifecycle costs and low maintenance cost and is a very reliable program for performance. So the guys on the ground, the operators are really happy with the Lakota program,” McArtor said. "To me it's not surprising at all that they wanted to not only continue that program, but to potentially expand that program into the training mission as well.”
The Army’s fiscal year 2015 budget requested $416 million for 55 Lakotas, more than doubling its fiscal year 2014 procurement of 20 helicopters at $171 million. The Army plans to buy 45 more aircraft in fiscal year 2016.
McArtor believes the Army’s demand could increase even beyond that, he said. “I’m quite confident that if we’re able to sustain the reliability and performance and the confidence of the operators in that platform, that it will have very long legs as a program.”
Airbus’s Columbus, Miss.- facility can produce a maximum of 55 Lakota helicopters per year under its current contract. To date, its highest rate of production has been 53 in a year, according to James Darcy, an Airbus spokesman.
In the upcoming weeks, Airbus will deliver its 300th Lakota to the Army, McArtor said.
The Army has seemingly abandoned its armed aerial scout helicopter competition to replace the Kiowa Warrior, but McArtor believes the service should revisit that decision.
“We think … that it would be very valuable for the Army to go ahead and run a competition,” he said. “It would cost them … $10 [million] to $12 million maybe to run the competition, but at least that gives them the knowledge base with which they could look over the next decade and understand" whether it’s more affordable to use the Apache for the armed reconnaissance role or to buy a new aircraft.
Last year, EADS North America withdrew from the Army’s joint multi-role demonstrator program to focus on the armed aerial scout competition, for which it offered a weaponized version of the
Lakota. JMR is intended to mature advanced, innovative rotorcraft technologies and is a precursor to the future vertical lift program — a series of vertical takeoff and landing aircraft that will replace the service’s current helicopter fleet.
As one of the few manufacturers who has built prototype rotorcraft that can exceed speeds of 200 knots, EADS was considered one of leading companies in the competition.
Even though Airbus is not participating in joint multi-role, it could decide to enter the future vertical lift competition later on, Darcy said.
“When you look at the way the [JMR] requirements are defined or the way requirements were not defined, it really leaves it open for industry to go out and to do their development independently,” he said.
McArtor said the company is pursuing a “very aggressive” research-and-development program for next-generation helicopter technologies for both the commercial and defense industries.
One contract that the company probably isn’t interest in is the Air Force One fixed-wing aircraft replacement.
“Airbus could put together a dramatic candidate for Air Force One. It’s a tough business case though to say that you want to compete for that” because it's such a small fleet, McArtor said. “I would find it unlikely that we would find that attractive, but we’ll have to see what the [request for proposals] will look like.”