BAE Systems – EADS Merger: Not Economically Viable?

As the merger is slated to create the biggest non-American aerospace and defense firm, will the BAE Systems – EADS merger be deemed no longer economically viable in our current post-9/11 world?

By: Ringo Bones

As of Wednesday, October 10, 2012 came and went - the proposed merger of BAE Systems and EADS merger got cancelled due to an insurmountable political deadlock due to competing national interests between France, Germany and the UK. Given that colossal aerospace / defense firms had been no longer economically viable since the austere fiscal environment of the post-Cold War early 1990s, never mind in our current post 9/11 world where the West is currently engaging a “War on Terror” on groups with a nonexistent military-industrial-complex. Will the BAE Systems – EADS merger to form a Eurozone-based super aerospace/defense firm to rival that of the United States’ Boeing and Lockheed-Martin be not only no longer economically viable but seem like an anachronism as well?

Prior to the Wednesday, October 10, 2012 deadline came and went, extensions may be necessary as talks over the 30-billion US dollar BAE-EADS merger got stuck over government ownership and control as the stakes of the powers-that-be – namely France, Germany and the UK – is simply too lucrative to have smoothly resulted in a power-sharing (profit-sharing?) compromise that talks are currently “close to collapse”. Given the difficulty of the regulatory hurdles that need to be addressed, is such a merger even necessary from a commercial sense?

The European defense market is no longer the future, says the top brass of both BAE and EADS involved in the merger. And it seems that the current buzzwords of “declining defense markets” seem like a euphemism for the Afghan Taliban and Al Qaeda doesn’t have a preexisting aerospace industry that needed to be destroyed for a profit, never mind a preexisting military-industrial-complex. Even as far back during the 2010 Farnborough Air Show, Louis Gallois – chief executive of EADS – already reached the realization that the Eurozone defense market is no longer the future as he prepares to make plans to sell the then recently rolled-out Airbus A400M Military Transport to the American defense market after the A400M’s European funders decided that they have no interest anymore to procure the Airbus A400M Military Transport.  So if ever a BAE-EADS merger ever comes to pass, it may have to woo whoever’s in charge of the US Department of Defense’s procurement in new military hardware  - namely high capacity long-range military transport planes and unmanned drones - in order to stay economically viable in the austere fiscal environment of the post-9/11 world.