EADS is opting out of bidding on some U.S. weapons programs as it adjusts to cuts in U.S. defense spending, and it expects flat to lower revenue in defense business in coming years as the cuts deepen, a senior executive said on Wednesday.
"There's no doubt that the government sector is flat to declining and we're forecasting the same," Sean O'Keefe, chief executive of EADS North America, told the Reuters Aerospace and Defense Summit.
International sales may compensate somewhat, he added. The company is girding for a tough year for its defense business even as its Airbus commercial jetliner business books a record backlog of orders, including a sale of 40 jets to Delta Airlines, announced Wednesday, a deal worth $5.6 billion at list prices that ends nearly two decades of exclusive Boeing sales to the U.S. airline.
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O'Keefe, speaking at the Reuters office in Washington, D.C., said the U.S. bidding process has slowed in response to budget cutting and sequestration, which he called "a self-inflicted fiscal challenge that nobody's ever seen before."
He said EADS is targeting defense contracts that allow it to build on core strengths, while avoiding far-reaching programs that might not pay off. For example, the U.S. Army's vertical lift aircraft program.