EADS exec expects defence profit rise, drone deal

By Jason Neely, European Aerospace & Airlines Correspondent

LONDON, Sept 11 (Reuters) - The Defence & Security division of Airbus parent EADS (EAD.PA: Quote, Profile, Research) is on track for higher profits as well as for a European contract to further develop its latest unmanned drone, according to the unit's chief executive.

Stefan Zoller said the division, which posted an operating profit of 348 million euros ($481 million) in 2006, would build on that this year: "It wouldn't be worse, it will improve."

"Today we are in the range of 6 percent return on sales and to achieve 8 to 10 percent is soon in the future, I have to say," Zoller told a meeting with aerospace and defence journalists on Monday night. He did not elaborate further.

Zoller said EADS would not build a new Barracuda unmanned combat aerial vehicle after the company's only demonstrator crashed last year off the coast of Spain.

"You won't see any further development of Barracuda," Zoller said, adding that EADS was instead moving forward with its advanced UAV (unmanned aerial vehicle).

He said a risk reduction phase contract for the advanced UAV for Germany, Spain and France was expected soon from Germany's defence procurement organisation.

On the A400M military transport plane, Zoller said the first flight due next year was now six months behind schedule.   Continued...