European air and defense company EADS, the parent company of Airbus, said Monday it is cutting 5,800 jobs over the next two years as part of a major overhaul to reduce costs and refocus on civil aviation.
The company said in a statement that the jobs would be eliminated from its corporate and space and defense divisions by the end of 2016. The many space and defense divisions will be combined into one arm, to be called Airbus DS.
EADS, which is changing its overall name to Airbus, is also getting rid of its corporate headquarters, just outside Paris, and moving staff to another site, also outside Paris.
The company had once sought to become less dependent on its civil aircraft business with a goal of increasing its defense business, maker of the A400M European freighter, to around half of total revenue. Those plans were shelved as the global economic downturn caused government to cut down on spending.
Meanwhile, the civil aircraft business, which accounts for almost 70 percent of EADS' group sales, is thriving, despite delays to the rollout of its new extra-wide body A350.
EADS' net earnings rose 45 percent in the third quarter, to 436 million euros. But CEO Tom Enders said Monday that the cuts were necessary if the company is going to compete and attract defense and space customers in growing markets outside Europe, which is not doing as well.
"We need to cut costs, eliminate product and resource overlaps, create synergies in our operations and product portfolio and better focus our Research and Development efforts," he said.
EADS said it would offer up to 1,500 of those laid off positions at Airbus or Eurocopter. Another 1,300 positions will be eliminated by non-renewal of temporary contracts. After offering voluntary plans to employees, EADS expects to have to make 1,000 to 1,450 outright layoffs.
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