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Thales Airborne Systems envisions industrial and economic restructuring plan to safeguard competitiveness

25 November 2005

Thales Airborne Systems senior management has presented an industrial and economic restructuring plan to the company's central works council. This plan is designed to ensure that the company stays competitive.

Thales Airborne Systems, whose business is focused on radars and electronic warfare systems for combat aircraft, is today facing harsh economic realities in defence markets.

Following an exceptional peak of activity in recent years, the company is now being hit by a combination of factors:

* Major Mirage export programmes are nearing completion and there are no new projects on the same scale.
* New major development programmes-Rafale and Mirage 2000-are also nearing completion.
* Competition is becoming fiercer within Europe and globally, and the weakness of the dollar against the euro makes this even more acute.
* Customers are demanding more complex systems with lower value added for the company, requiring cooperation and offset agreements to win contracts.
* We are under intense pressure from all our customers to lower prices.

These factors translate into a decline in workload of around 20% between end-2005 and end-2007

To cope with this situation, Thales Airborne Systems senior management has proposed a plan to optimise and simplify our organisation and tailor staff numbers to the expected drop in workload.

The proposed plan is designed to enable Thales Airborne Systems to stay competitive by maintaining its investments to safeguard the future.

The plan proposes to:

* Move activities now at Elancourt to the Brest and Pessac plants to concentrate development and manufacture of certain products at a single site, and thereby streamline operations. This part of the plan would entail a move for about 240 employees.
* Tailor staff numbers to the expected decline in workload at the hardest-hit units. This will mean about 560 redundancies across the three sites.

Allowing for possible early retirements, these redundancies would lead to approximately 400 employees needing reclassification. Jobs will be offered within the civil business units of the Aerospace Division, to which Thales Airborne Systems belongs. Business in these units is growing and there are today more than 200 jobs to be filled. Further job opportunities will be offered in the Group's other business units.

Thales Airborne Systems senior management is committed to finding a personalised solution suitable for every employee affected by the plan.

The plan will be discussed with staff representatives throughout the information-consultation process now underway. Implementation of the plan is scheduled to begin in 2006.

Thales Airborne Systems today has 4,850 employees in France at its plants in Elancourt (2,880), Brest (1,050) and Pessac (920).

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