BAE and EADS speak about possible merger, claim expansion rather than contraction

By Skyler Frink
When news dried up on the possible merger between BAE and EADS all that was left was speculation, and speculate we did. With shrinking defense budgets and many companies preparing for armageddon it makes sense that mergers would occur. However, Ian King, the Chief Executive of BAE Systems and Tom Enders, the Chief Executive of EADS, have now gone on the record saying the possible combination is not because of financial trouble.

The two chief executives explained that they hope to obtain a wider customer base, more scalability and a greater potential to ride the cycles of civil aviation and defense spending.

What I can't quite put my finger on is the purpose of the Op-Ed by the two chief executives. Is the goal to reassure investors and governments that the merger will be beneficial to all? Is it a response to the sudden $5.2 billion drop in EADS share values since news of the talks broke?

The message is meant to be one of prosperity, but one quote in particular is less than promising for current BAE and EADS employees.

The release, which was posted on the BAE website, reads "Clearly, there will be scope for efficiency savings when two companies of our size come together, but great benefit will derive from our ability to exploit new business opportunities. That has to be good for jobs and economic prosperity in the long term."

While growth in the long term is good, the statement seems to imply that the short term will result in employees being lost and facilities being closed.

Whatever happens in the current merger talks, this will have a large impact on the defense industry, and we at M&AE will be watching closely to see what happens next.

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The Mil & Aero Bloggers

John Keller is editor-in-chief of Military & Aerospace Electronics magazine, which provides extensive coverage and analysis of enabling electronic and optoelectronic technologies in military, space, and commercial aviation applications. A member of the Military & Aerospace Electronics staff since the magazine's founding in 1989, Mr. Keller took over as chief editor in 1995.

Ernesto Burden is the publisher of PennWell’s Aerospace & Defense Media Group, including Military & Aerospace Electronics, Avionics Intelligence and Avionics Europe.  He’s a father of four, a runner, and an avid digital media enthusiast with a deep background in the intersection of media publishing, digital technology, and social media. He can be reached at ernestob@pennwell.com and on Twitter @aero_ernesto.

Courtney E. Howard, as executive editor, enjoys writing about all things electronics and avionics in PennWell’s burgeoning Aerospace and Defense Group, which encompasses Military & Aerospace Electronics, Avionics Intelligence, the Avionics Europe conference, and much more. She’s also a self-proclaimed social-media maven, mil-aero nerd, and avid avionics geek. Connect with Courtney at Courtney@Pennwell.com, @coho on Twitter, and on LinkedIn.

Mil & Aero Magazine

February 2015
Volume 26, Issue 2
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