EADS head fears 'domino effect' in defence spending cuts

9th June 2010, Comments 0 comments

EADS chief Louis Gallois called on Wednesday for talks with debt-laden European governments on how to limit cuts in defence spending and avoid a "domino effect" that might threaten entire programmes.

European countries that must reduce public deficits and debt are mulling drastic spending cuts and "defence is certainly one of the budgets they are looking at," Gallois told a press briefing here.

The head of the European Aeronautic Defence and Space Company said officials should coordinate defence policies more closely to "limit the damage" and keep programmes from getting ditched altogether.

"One priority is to avoid domino effects," Gallois said.

"We need coordination between different countries involved" in international projects, he added.

"We want to make them aware that when they are attacking one programme they could damage another programme in another country."

EADS was prepared to talk with national authorities and find ways of dealing with the situation.

"We want this dialogue to show governments where their interests are," Gallois said at the ILA air show.

"We have to demonstrate that the best way to save money is to cooperate in Europe."

Gallois said austerity budgets would pose a major challenge to EADS, along with the development of the A350 passenger jet by its Airbus division.

But he added: "I have to say I am not extremely worried if we are able to have this dialogue, to discuss the best way to save money."

Germany, the biggest European economy, has said it will slash spending to straighten out its finances by 2013, and could cut its armed forces by 40,000 troops.

Gallois said that by 2020, EADS hoped to have a better balance between its various activities, which focus on aircraft manufacturing and defence but also include space launchers and security systems.

The group hopes to nearly double sales by that time to around 80 billion euros (95 billion dollars) per year.

Acquisitions were a one possibility, he said, particularly in the security and services sectors in the United States and elsewhere.

© 2010 AFP

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