Analysis of the aircraft and defence industry: Financial ratio analysis and prediction

Résumé du document

The European Aeronautic Defense and Space Company (EADS) is an aerospace and defense corporation. EADS was founded on July 10, 2000, through the merge of Aerospatiale-Matra DaimlerChrysler Aerospace AG and ConstruccionesAeronauticas SA. The firm is headquartered in Leiden, Netherlands, under CEO Thomas Enders. EADS serves defense and military contracts, with over 133,000 employees at over 170 sites worldwide. Key markets are located in Australia, Brazil, China, India, the Middle East, North America, Russia and the United Kingdom, served by several thousand suppliers from over 100 countries. The EADS Group consists of the following four main divisions:

•Airbus – Commercial and military aircraft manufacturing subsidiary
•Astrium – Aerospace subsidiary; provides civil and military space systems and services
•Cassidian – Defense and security division; provides global security solutions
•Eurocopter – Global helicopter manufacturing and support company

As of 12/31/11, Airbus segment makes up 62% of EADS' total revenue. Cassidian, Eurocopter and Astrium follow respectively with 11%, 10% and 10%. The last 6% derives from Military transport aircraft and other segments. EADS aims to increase the share of non-Airbus activities, especially defense and institutional businesses, to ultimately achieve a 50/50 balance.

Extraits

[...] Commercial review. Presented at the New Year Press Conference 2012. RUAG. (2012). RUAG Holding AG. Retrieved November from http://www.ruag.com/en/Group/Group_Home Siegel, M. L. (2012). Industry Analysis: Aerospace and Defense. Valueline. Retrieved November from http://www.valueline.com/Stocks/Industries/Industry_Analysis__Aerospace_and_ Defense.aspx Stockholm International Peace Research Institute. (2011). The SIPRI Top 100 arms-producing and military services companies sipri. [...]

[...] Compared to industry average, quick-ratios are really close to industry averages. Current ratios are lower than industry average, due to the need of the cash for investments. Leverage Looking at the leverage ratios, one easily remarks the upward trend in all the ratios, which means that debt level has increased considerably. But on general the debt level is very high. In 2011 debt-equity ratio reach which means that equity is only a ninth of the debt level. Thus, EADS operates with a considerable high leverage. [...]

[...] A famous example of buyer's power was the aircraft purchase of Ryanair in 2002. The company ordered 100 Boeing 737-800 airplanes with an estimated 37% rebate. The reason behind this great deal, were the terrorist attacks of 9/11 which let demand for new aircrafts to drop considerably. Taking this example of low price airlines, customers do not expect much from the aircraft. If the fares for the flights are low, customers only want to get from Point A to Destination B. [...]

[...] (2010). Financial Statements 2010 (Annual Report) (pp. 1-126). Leiden: EADS. EADS. (2011). Financial Statements 2011 (Annual Report) (pp. 1-126). Leiden: EADS. EADS. (2012). About Us.EADS. Retrieved November from http://www.eads.com/eads/int/en/our-company.html Leahy, J. (2012). [...]

[...] This can be experienced with the TGV (Train à Grande Vitesse) in France between for example Paris and Lyon. Moreover, in case cars were automatically controllable and able to offer such high speed on traffic jam free highways; it could be considered a treat of substitution. Coming back to reality, a big impact on the air travel can be seen in the development of telecommunication systems. Through the introduction of video conferencing and free of charge Internet calling, people have to travel less which decreases revenues of the aircraft industry. [...]