Airbus to sell off business units in defence and space review

Announcing the results of a portfolio review, Europe’s largest aerospace group signalled a break with previous efforts to diversify into security activities and a halt to investment in defence electronics, in which it lacks the scale of rivals.

Europe’s defence industry is struggling as cash-strapped governments cut back on military spending. EADS, later renamed Airbus, responded in 2012 by trying to merge with BAE Systems, but the deal was blocked by Germany. That, coupled with the stronger-than-expected growth of its jetliner business, led Airbus to drop a previous goal of having broadly balanced revenues from its commercial and defence arms, and launch a reassessment of its defence and space activities.

The group said it would sell its Professional Mobile Radio secure communications assets and confirmed plans to sell a 49-per cent stake in submarine supplier Atlas Elektronik, unwinding two efforts at diversification embarked on nine years ago. It said it would also consider selling other commercial and non-governmental satellite communications activities.

Also up for sale are systems and software company ESG, and three smaller units: US-based environmental systems supplier Fairchild Controls, German cabin simulator maker Rostock System-Technik and AvDef, a small aviation company in southern France that trains fighter pilots.

The move comes weeks after a reorganisation of space launcher activities jointly with France’s Safran and leaves Airbus Group’s share of the Eurofighter and MBDA missile consortia, as well its own A400M airlifter, at the centre of a non-jetliner portfolio focused on aeronautics and space.

The shake-up is likely to test the group’s prickly relations with the German government.