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According to an internal document obtained by Reuters last month, Germany is planning to reduce its fighter jet and helicopter orders from the European aerospace company EADS. German defence minister Maiziere wants to cut 37 of 140 Eurofighter aircraft, to reduce an order for Puma armoured vehicles to 350 from 410 and halve an order for Tiger combat helicopters to 40. De Maiziere also wants to reduce the number of NH-90 helicopters to 80 from 120.

This cut in orders could trigger penalty payments for Germany unless EADS is willing to amend existing contracts. There is also another solution. According to sources close to the subject, EADS is prepared to waive penalties for a cut of Eurofighter orders if Germany promises to order Talarion drones instead. Stefan Zoller, head of EADS' defence and security unit Cassidian, is said to propose such a deal to De Maiziere.

For EADS this could be a way out of their Talarion dilemma, as the company has spent years developing this unmanned aerial vehicle at its own expense (around €500 million) in the hope of winning contracts from France, Germany and Spain.  EADS is frustrated that France is looking at Dassault Aviation’s Telemos drone which is developed with Britain's BAE Systems. The development is part of the Franco-British defence pact, signed last year. A Talarion deal with Germany would be more than welcome to ensure a position for EADS in the booming drone business and reduce the risk of financial disaster.

In the mean time, EADS is warning European governments to put limits to defence budget reductions as these might threaten the future of the European military industry. Chief executive Louis Gallois issued this warning at a closed meeting of the AeroSpace and Defence Industries Association (ASD), the European arms industry's lobby organisation. Gallois also called on European governments to more strongly support exports. Economic crisis or not, the defence industry wants its growth rates sustained.

WdV Nov.10 2011

Latest news: The German state will take over 7.5% of EADS shares from Daimler to keep the Franco-German-Spanish balance in the company. Earlier rumours of Qatar having an interest in these shares might have been true, but apparently EADS is destined to stay European.