EADS was meant to be the model European company. That long ago ceased to be the case, unless the model it was highlighting was a feeble, if not to say broken, one.
But the company still holds up a mirror to the continent and the flurry of news in recent days makes uncomfortable reading for European business.
First off came the news that seven European governments had finally agreed after months of squabbling to pay more for the A400M military transport aircraft, built by EADS’ subsidiary Airbus.
The uncomfortable truth it underlined is that big industrial projects in Europe are unfeasible without heavy government support. Speaking to chief executives regularly, I am amazed that their vision of the industrial future of Europe is based on government subsidies, albeit for green technology.
The second event came on Monday night when EADS’ long-held hope of cracking the US defence market seemed to evaporate. This saga has had more twists, turns and dastardly deeds than most pulp fiction. But it also underscores the unfortunate position of some of Europe’s leading companies in the US.
EADS has long struggled to get a foothold there and its much-trailed announcement of looking for defence acquisitions has yet to amount to much. Similarly Volkswagen in cars and ThyssenKrupp in steel are well behind other foreign competitors in the US. Both of them are opening plants in the south of the US but success is far from guaranteed.
All are desperate to escape the pernicious exchange rate effects that come from euro-dollar fluctuations. Again, EADS shows European worries here as it announced on Tuesday a negative impact from currencies – mostly the strong euro – of a whopping €2.5bn last year.
That was part of the third event: a poor set of annual results. A loss, weak revenues, a low profit forecast for this year – they hardly suggest the most robust news for Europe. Overall, European companies seem to be coming out of this recession slower than their American counterparts – to say nothing of their Asian rivals.
And all of this ignores some of EADS’ big structural issues. The Franco-German partnership works poorly, it seems unable to make profits from its big projects such as the A380 superjumbo and its shareholder structure is still a mess.
When I met Bodo Uebber, the finance director of Daimler who also moonlights as EADS’ chairman, last week he was keen to underline the aerospace group is more normal a company that it has ever been. But EADS’ normality is not one most companies would want. Europe must hope the bad news ends soon.
