AIRBUS AND ALABAMA: 'Almost married'

AIRBUS AND ALABAMA: 'Almost married' Editor's note: This story, which appeared on the cover of The New York Times business section Tuesday, offers an example of the national interest in efforts by the European Aeronautic Defence and Space Co...

With the election of Nicolas Sarkozy as the president of France and with Angela Merkel elected as the chancellor of Germany, two key countries have signaled a greater friendliness to the United States, and that has raised the hopes of EADS.

Wins and losses

While Boeing derives about half of its business from the military and the other half from its commercial operations, EADS draws 60 percent to 70 percent of its revenue from its Airbus division, which has been bogged down by problems with its A380, the so-called superjumbo airliner, as well as its new midsize A350.

EADS does about $1 billion of business a year with the United States government, and notes that it is the largest single customer for American defense and aerospace products.

Small and shrinking military budgets in Europe - especially when compared with an expanding Pentagon budget - are further pushing the company's interest across the Atlantic. Besides Pentagon contracts, EADS has said it is also looking for possible strategic acquisitions of American military companies.

EADS has had its share of Pentagon wins and losses.

It beat out two U.S. companies and an Italian company for a $3-billion U.S. Army contract awarded last June to build the next light utility helicopter fleet. The craft will be built at an EADS facility in Columbus, Miss.

But a stinging loss came just days before the Paris Air Show, when EADS lost out to L-3 Communications Holdings in a $2-billion deal for a small cargo plane for the Air Force and the Army.

L-3 had teamed with Finmeccanica of Italy and Boeing, while EADS had teamed with the Raytheon Co. The competition was notable for pitting an Italian plane against an Airbus version.

"It was certainly disappointing, but this is not going to define EADS strategy in the United States," said Guy Hicks, a spokesman for EADS North America. "We're here to stay."

The tanker deal has captured the attention of the aviation community, not only for its size but also for a series of unexpected turns of events that opened the door for an Airbus bid.

In 2004, Boeing had almost won the tanker contract through an unusual leasing arrangement with the Air Force. But congressional scrutiny of the financial deal, led by Sen. John McCain, R-Ariz., caused it to be scuttled. The greater oversight uncovered a conflict of interest scandal that led to the jailing of Boeing's former chief financial officer and a former top Air Force official.

Those events opened the door for EADS to become a competitor.

Political support

Over the last year, a steady stream of members of Congress, many with no ties to Alabama, has been touring the Airbus facility in Toulouse, among them Reps. Shelley Moore Capito, R-W.Va., and Jim McDermott, D-Wash., who is a member of the House Ways and Means Committee.

In addition, Thomas Enders, the co-chief executive of EADS, became a frequent visitor to Washington, calling on members of Congress and, along with Merkel, meeting President Bush in the White House. Enders spoke recently to the U.S. Chamber of Commerce on the importance of trans-Atlantic ties and is to meet with Pentagon officials at the Paris Air Show.

An Airbus tanker, bought by the Australian government, will be part of the aerial demonstration at the show. In addition, Enders will appear at a joint press conference on the tanker issue with Ronald D. Sugar, the chief executive of Northrop Grumman, which is the American partner of EADS in its bid.

Back in Toulouse, Enders, along with Ralph Crosby, the chief executive of EADS North America, and Allan McArtor, chairman of Airbus North America, held a dinner for the Alabama delegation, before everyone headed to Paris. Crosby, McArtor and other EADS executives were also at the Paris reception.

In all, 46 politicians and others from Mobile came to Paris, including Alabama's other senator, Richard C. Shelby, a Republican, members of the state Legislature and a majority of the members of the Mobile City Council.

This activity has not gone unnoticed at Boeing.

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