EADS in trouble-plays Hardball with A400 Consortium.

[ASFC]

http://defensenews.com/story.php?i=3734593&c=EUR&s=AIR

I'm not sure what to make of this-surely as EADS is owned by two (three?) of the countries who are buying the A400, it is up to those countries if they are willing to see EADS profits take a hit.

I can't see how either side is going to win on this-it will get worse for EADS if the A400 has cancelled and/or delayed orders, on the money front that is, and if Europe does call EADS bluff there is going to be a shortage of lifters, as many countries lifters are getting to or beyond the end of their lifes. (Note RAF C-130Ks are already off to Canada for life extension work).

I wonder if the RAF will get any more C-17s out of these delays?

No doubt the A400s opponents and detractors will come along now and gloat.......:unknown

 

[kato]

What profits? Unless EADS manages to sell more A400M to countries not yet on contract, they're incurring a loss on the whole project.

Nothing will come of this. EADS simply can't pull this through, they'd lose what - around 30 billion euro of contracts, plus several billion in contractual fines? Would be the end of EADS.

 

[swerve]

I'm not sure what to make of this-surely as EADS is owned by two (three?) of the countries who are buying the A400, it is up to those countries if they are willing to see EADS profits take a hit.

EADS share ownership, as of 30th June 2008:

46.97% publicly traded,of which 0.61% owned by the French state.
Remainder in a partnership, distributed as follows -
5.49% owned by SEPI (a Spanish state holding company)
47.5% in a partnership controlled by Daimler & Lagardere -
22.52% Daimler AG
25.02% SOGEADE (50:50 French state & a holding company controlled by Lagardere, i.e. 12.51% each - all voted by Lagardere)

EADS is therefore 18.71% owned by countries buying A400M, & 81.29% in other - mostly private - hands, but for some reason, the false belief that EADS is owned by France & Germany (which owns no shares) is widely held. Ah well.

 

[kato]

The Kuwaiti Government also owns 1.7% of EADS through their Daimler shares, and isn't buying A400M afaik.

Lagardere is gradually reducing their share since 2006. Originally, Daimler and SOGEADE each owned 30% of EADS, both are reducing their total share to around 20% in order to have more traded stock volume.

 

[swerve]

And a Russian state-owned firm owns a few percent of the publicly traded shares, & a Dubai investment fund which may or not be under the aegis of the state (I'm not sure, & not bothered to look it up) owns 3%. As is hinted by your post - deliberately? - state investment funds own a lot of things, but don't necessarily consider them anything other than purely financial investments.

About the reduction of the big stakes you mention: a year earlier, only 41.36% of shares were publicly traded. BTW, I think the "Lagardere" stake which is being drawn down includes the state shareholding. They've been cut in step with Daimler, in 2.5% slices: IIRC the 2.5% difference reported above is planned to be sold soon, which will reduce French state ownership by another 1.25%.

 

[kato]

The original setup was that Daimler and SOGEADE would both own 30% (with the SOGEADE stock split at 15% each for the French government and Lagardere), with 40% publicly traded.

Longterm planning is to reduce this to 22.5% shares each, with 55% publicly traded.
Daimler has already cut its shares to (roughly) the 22.5% goal by now, Lagardere as the SOGAEDE control agency is doing a gradual reduction and is supposed to reach the 22.5% goal for SOGAEDE next year.

Notably, together with SEPI's 5.49%, this still maintains a controlling interest between the four biggest shareholders, with about a third of their shares controlled by government funding.

SEPI originally was planning to increase their share to 10%. A Russian state-owned bank holds 5.02%.