Commercial Air Sales Turn EADS Back to Profitability

Sales of their Airbus commercial airliners has somewhat tempered EADS (EADS:P) feelings about losing the KC-X contract to rival Boeing (BA). In the last year thanks to large orders the European aerospace company returned to profitability after a few years of struggles.

Revenue in 2010 was over $60 billion and the company earned a profit of around $1.5 billion. The company has also been able to increase its cash holdings dramatically with an eye on expanding U.S. defense business through acquisitions.

Boeing and EADS unlike other large defense contractors do have the commercial aviation market to help temper ups-and-downs in military spending. They are though soon to be facing more competition from companies like China’s CAI who especially want to enter there own domestic airline market.

EADS has carefully looked at different potential acquisitions in the U.S. to help grow its nascent defense work there. Certainly they now have the necessary funds to do even a rather large one although something like buying Northrop Grumman’s (NOC) shipbuilding group would seem a little too large and ambitious. EADS will most likely target a medium sized defense contractor who provide services or limited hardware.

Gama Group confirmed as partner for BAE Systems-led bid for Fixed Wing Aircraft Service Provision — Press Release

Gama Group confirmed as partner for BAE Systems-led bid for Fixed Wing Aircraft Service Provision

Farnborough Airport, UK – Gama Group Limited (‘Gama’) has joined a partnership with leading British companies BAE Systems, Babcock Aerospace Limited and Switzerland’s Pilatus Aircraft Limited to offer a training aircraft availability service solution for the UK armed forces.

BAE Systems will lead the bid to Ascent Flight Training, the UK MoD’s Training Service Partner, to be the Fixed Wing Aircraft Service Provider (ASP) for the UK Military Flying Training System (UKMFTS) programme. Under UKMFTS, the UK MoD has a requirement to provide a range of aircraft platforms and systems available to train aircrew across the Royal Navy, Army and Royal Air Force. Gama is working with BAE Systems and its partners to submit an integrated proposal to Ascent in January 2011.

The partnership has been created to provide Ascent and the UK armed forces with a flexible and harmonised service solution to support future flying training for elementary, basic and multi-engine disciplines over the next 25 years.

Utilising its breadth of experience in the competitive commercial and business aviation market, Gama will lead all aspects of the multi-engine elements of the proposal, including platform selection and an optimised through life support service.

Gama brings to the team 27 years’ experience running an established business aviation services organisation. Today it manages a varied fleet of 75 business aircraft from bases in Europe, to the Americas and the Middle East. Gama also provides a turnkey support service for the Scottish Air Ambulance fleet and retains a contract for current MoD operations.

Marwan Khalek, Gama Group CEO said: “We are pleased to be working on this important programme for the UK’s armed forces with three highly regarded partners. Having a detailed operational understanding, maintenance expertise and customer focus are all fundamental elements for this future UKMFTS programme. Gama has applied its entrepreneurial flair to developing a solution that offers Ascent and the MoD a high quality, value for money solution.”

About Gama Group

Gama is an international business aviation services organization, founded in 1983 in the UK by Marwan Khalek and Stephen Wright. The group employs over 300 at bases across Europe, the Americas and the Middle East, operating over 75 business aircraft. The group’s companies and affiliates hold EU-OPS, FAA Part 135 and UAE GCAA Charter Certificates, FAA Part 145 Maintenance Approvals, Part 21 Design and Manufacture Approvals and offer business aircraft charter, management, FBO, maintenance, valeting and aviation software services. The Group is headquartered at Farnborough Airport in the UK, with its Americas headquarters in Stratford, Connecticut and its UAE headquarters in Dubai.

Gama has a Part 145 maintenance operation at its Farnborough, UK and Connecticut, US bases UAE GCAA Air Operators Certificate. Gama line maintenance support for its owned and managed aircraft fleet, offering third party MRO support for aircraft up to Learjet size. It holds Part 21 design and manufacturing approval and expertise extends to avionics installations through its subsidiary Lees Avionics Limited.

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A400M Talks Continue

With the Paris Airshow coming up there is a great deal of pressure on EADS to be able to announce some good news at the premier showcase for their products. The company is looking at some severe issues on the military side with their major program the A400M facing push back from its customers.

This medium transport program is at a critical juncture as the nations looking to buy it have the right to end their deals and demand several million dollars worth of payments back from the company. England has been the most negative on the project as their budget problems overall are forcing an entire re-look at military procurement. Some of the other smaller countries such as Spain and Turkey have been more positive.

Now it is reported that talks between EADS and its customers have been extended once again to try and work something out. The hope is that more defense work will be able to balance off the decline in the civil aviation market driven by the world’s recession. Unfortunately like Boeing is facing EADS may have to deal with some major cuts to plans for U.S. defense spending. The FY 2011 budget may continue the large cuts to defense programs that Obama’s first one did.

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