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EADS board discusses reorganization, rebranding plans

Logo of EADS is seen at the European aerospace and defence group EADS headquarters in Les Mureaux near Paris January 12, 2011. REUTERS/Charl
Logo of EADS is seen at the European aerospace and defence group EADS headquarters in Les Mureaux near Paris January 12, 2011. REUTERS/Charl

By Tim Hepher and Cyril Altmeyer

PARIS (Reuters) - The board of EADS gathered on Tuesday to vote on a reorganization that will see the European aerospace group adopt the name of its main Airbus subsidiary, industry sources said.

By retrenching to three units instead of four, the restyled "Airbus Group" aims to sharpen efforts to double its margins by mid-decade to catch up with rival Boeing and get a lift from one of Europe's best known brands.

Barring a request by the company's board to ask for more time to review the changes, the reorganization will be announced on Wednesday with first-half earnings that are expected to show flat operating income at the main Airbus plane making division.

Chief Executive Tom Enders launched a strategy review after failing to secure a merger with UK defense company BAE Systems and instead winning a shake-up in governance last year.

The main change will involve merging the defense and space divisions into one Munich-based unit, called Airbus Defence & Space. This will also incorporate Airbus Military, the Spanish operation which builds refueling tankers and army transporters.

A potential web site, airbus-defence.com, was registered a few days ago, according to online domain records.

Eurocopter, the world's largest civil rotary aircraft maker, will stay as a separate unit and will become Airbus Helicopters.

The core Airbus plane making business, which makes up close to 70 percent of group revenues, should keep its one-word name despite earlier suggestions that it might gain a longer title to drive home the fact that it is the unit of a larger group.

Analysts say the changes are expected to cut some jobs.

"Regrouping defence activities under one umbrella would have the merit of making the target of 10 percent EBIT margin by 2015 more credible in the non-Airbus divisions," said Kepler Cheuvreux analyst Christophe Menard in a note.

"There are still hurdles on the way, as the regrouping entails some social costs, needing government validation."

Analysts say the rebranding is likely to make it easier to integrate nationally focused activities, especially in defence, but will leave little separation between the parent and main subsidiary, sharing both a name and headquarters city, Toulouse.

The Airbus brand takes Europe's largest aerospace company back to early European efforts to cater to demand for affordable mass travel - which still dominates the company's order volumes today, following the dramatic rise of low-cost carriers.

"The airbus" was originally a generic name given to European efforts to build a people-carrier jet some 50 years ago and was first registered as part of a company name in Germany in 1965.

EADS - originally European Aeronautic Defence & Space Co - came onto the scene as the result of a merger of French, German and Spanish assets in 2000, including most of Airbus.

The founders of EADS had considered adopting the name Airbus during talks that led to the merger, according to participants, but were unable to do so because Airbus was at that time partly owned by British Aerospace, which later became BAE Systems.

On its 10th anniversary in 2010, EADS dreamed up a new name for the group - "Aeria" - but abandoned it and the name was forgotten, its former communications chief blogged this week.

(Editing by Louise Heavens)

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