Airbus Defence and Space may be a new brand, but the former defense and space businesses of EADS face a familiar problem: how to remain profitable when European defense budgets are in decline and export competition is intensifying. The combining of Airbus Military, Astrium and Cassidian took effect at the executive level on January 1. Three weeks earlier, a reduction of 5,800 jobs at the new combined division over the next three years was announced.

Justifying the restructure, Airbus Defence and Space CEO Bernhard Gerwert told employees: “We have no choice if we want to survive: there are no major new defense programs in sight...we have lost important prospects to the competition in all divisions. Why? Because we are often too expensive.”

While the order book for Airbus airliners grew exponentially to reach €594 billion in 2013, the defense backlog declined to €48 billion last year from €58 billion in 2010. At €13.5 billion, the annual revenue of the new division will account for 20 percent of the Airbus group total. After the job cuts, the head count will be 37,300.

Airbus DS will have four “business lines”: communication, intelligence and security (CIS); electronics; military aircraft; and space systems. CIS includes former Astrium Services and Cassidian activities in border security, C4ISR, secure mobile radio, and satellite imagery and communications. Electronics includes avionics, electronic warfare, optronics, radars and IFF systems, and space electronics and payloads. Military aircraft combines the former Airbus Military A400M, A330MRTT and CN235/C295 with Cassidian’s Eurofighter, UAS and MRO activities. Space systems is the former “core” Astrium activity of space launcher and satellite production.

According to Gerwert, the new division will be number one in Europe for military transport, tanker and maritime patrol aircraft; number two for combat aircraft (behind BAE Systems); number two for border security systems (behind Thales); and the world leader in commercial space launchers and secure satellite communications.

Eurocopter was left untouched by the reorganization, as a separate division, except for a rebranding to “Airbus Helicopters.”