The New York Times reported Monday that European Aeronautic Defense & Space, or EADS, is set to announce a plan for the elimination of around 6,000 jobs in its military and space divisions over the span of the next three years. Airbus is the largest division of EADS NV (EPA:EAD). The company is expected to say that the layoffs are directly related to the general reductions in European military expenditures driven by austerity budgets.
Job cuts widely anticipated
An announcement regarding layoffs from EADS NV (EPA:EAD) has been widely expected since the company announced a reorganization over the summer. A reduction of 6,000 represents about 5% of the 133,000-strong EADS workforce. Analysts project that the majority of the cuts will come from Cassidian, the troubled military and electronics division of EADS, rather than from Airbus or other more profitable enterprises. This likely means most of the layoffs will be in Germany
EADS’ gradual layoffs
EADS NV (EPA:EAD) is planning to make the layoffs gradually in hopes of minimizing the political fallout. Most of the staff reductions will be through voluntary departures, early retirements or job transfers to better-performing divisions, according to sources involved in creating the plan.
The plan also includes the consolidation of dozens of plants in Germany, France, Britain and Spain, as well as the sale of significant real estate assets. Assets for sale might include the group’s former French corporate headquarters in Paris, which has been valued as high as $137 million.
The probability of thousands of layoffs has sparked protests in Germany. Two weeks ago, several thousand EADS NV (EPA:EAD) workers in a number of German cities protested the expected loss of thousands of above-average wage jobs when the German economy is starting to sputter.
EADS rebranded as Airbus
The robust growth of Airbus has led to the entire EADS NV (EPA:EAD) group being rebranded as Airbus beginning in 2014. The three main divisions will be named Airbus, Airbus Defense & Space and Airbus Eurocopter. Airbus — the commercial aircraft production arm of the company — generated more than 70% of the group’s total sales and greater than 50% of the overall profits.