Airbus Reviews Its Defense Business, Mulls Strategic Partnerships

Airbus has launched a review of its defense strategy that could open the door to more strategic partnerships as Europe's arms makers juggle security threats and pressure from some investors, people familiar with the matter said, Tim Hepher reported for Reuters.

Photo Insert: The business faces a number of challenges, with France and Germany struggling to finalize plans for a costly new combat jet involving Airbus and Dassault Aviation and the industry facing pressure from investors focused on environmental, social and governance (ESG) matters.

The most far-reaching examination of defense goals in years is being spearheaded by the company's board in a sign of growing independence from its government shareholders, though any major changes would need political backing of France and Germany.

Top management of Europe's biggest aerospace group strongly backs defense as a source of stable revenues, political support, and access to R&D funding. But the mainly independent board has the final say on strategy, subject to national security.

The business faces a number of challenges, with France and Germany struggling to finalize plans for a costly new combat jet involving Airbus and Dassault Aviation and the industry facing pressure from investors focused on environmental, social and governance (ESG) matters.

Defense revenues as a percentage of the group total - 21% - was 4 percentage points higher in 2020 than in 2017 and matched levels last seen in 2012 when Airbus tried to forge Europe's largest defense company by buying BAE Systems.

That's in contrast to the situation in 2019 when a pre-pandemic boom in civil jets pushed defense revenues down to 14% of the total, the lowest share in at least a decade.

Threats have meanwhile expanded to include the crisis in Ukraine. Arms spending by European Union states rose 5% to 198 billion euros in 2020, according to the European Defense Agency (EDA).

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