UPDATE 1-EADS to reorganize in 3 units, combine defence assets
* Broad new defence/space unit to include Airbus military branch
* Civil jets and helicopters to make up other large divisions
* Divisions and parent company seek lift from Airbus brand
* Changes subject to board approval, may be announced July 31
PARIS, July 25 (Reuters) - European aerospace group EADS is studying plans to reorganize into three divisions under the Airbus brand in a shake-up to be unveiled as early as next week, three sources familiar with the matter said on Thursday.
The overhaul would bring all defence and space activities under one roof by splitting Airbus Military, which makes tankers and military transporters, away from the main planemaking division and combining it with the space and defence units.
A spokesman for EADS declined to comment.
The company is anxious to streamline a collection of German, French and Spanish businesses that created EADS in 2000, as it seeks to double margins to 10 percent by mid-decade and get a global lift from one of Europe's best-known brands, Airbus.
The reorganization comes nine months after EADS was forced to abandon a bid to merge with UK defence firm BAE Systems , which was opposed by the German government.
In a bid to overcome German sensitivities about the future of its defence activities, the sources said the combined Airbus Defence & Space division would be based in Munich.
Based on 2012 figures, it would be responsible for a quarter of group revenues and profit instead of 10 percent each for the current EADS defence and space divisions known respectively as Cassidian and Astrium.
As part of the new identity, civil jetmaker Airbus may lengthen its name to clarify responsibilities, echoing the commercial unit of its arch-rival, Boeing Commercial Airplanes.
Even without military transporters such as the A400M and aerial tankers, an Airbus Commercial Aircraft unit would remain the group's dominant division, with 68 percent of revenues based on 2012 accounts.
The third division, helicopter unit Eurocopter, will remain in France and is expected to call itself Airbus Helicopters.
Plans for individual units have taken shape as EADS fine-tunes plans to rebrand the parent company as the Airbus group.
It was originally named European Aeronautic, Defence and Space Company but the name, later shortened to EADS, failed to win broad recognition.
GOING AFTER BOEING
If approved by the company's newly independent board, the changes could be presented to investors by Chief Executive Tom Enders when EADS announces half-year results due on July 31.
By placing defence and space together, and pairing the military derivatives of passenger jets with the rest of the defence business with which it shares customers, the new layout gives EADS a structure much closer to rival Boeing's.
Appointments have not been finalized but the head of Airbus Military, Domingo Urena-Raso, a veteran Spanish engineer who has held previous roles in the defence division, is tipped as one of the candidates to run the combined defence and space entity.
Until recently, national sensitivities prevented EADS from integrating its disparate group-wide defence assets into a single division tasked with working entirely as one business.
Following the collapse of talks with BAE, the company won a new corporate governance structure less prone to government interference and made a decision internally to stay in defence.
But it must balance this with investors' marked appetite for Airbus commercial activities, which have driven its shares up 45 percent this year. Airbus is set to raise its 2013 order target by 25 percent to over 1,000 jets when it gives interim results.
"The weakest piece is Cassidian's mainly German defence electronics and security businesses which are sub-scale and implicitly barely profitable" after removing shares in joint ventures, said Agency Partners analyst Nick Cunningham.
"They really need to close or sell some weak operations and remain hamstrung by political sensitivities, despite the recent changes in corporate governance," he added.
EADS shares closed up 2.7 percent at 43.45 euros.
U.S. industry experts meanwhile warned that renaming the group Airbus could complicate efforts to sell defence equipment in the United States, by far the world's largest arms market.