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Building upon our achievements
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| (€m) | 2005 | 2004 | Variation |
| Revenue | 2,698 | 2,592 | +4% |
| EBIT | 58 | 9 | +544% |
| Order intake | 2,322 | 5,658 | –59% |
| Order book | 10,931 | 11,311 | –3% |
Space confirmed its return to profitability in 2005. EBIT was substantially higher at €58 million (€9 million in 2004). The improvement reflects growth in what remains a difficult business environment, combined with the positive impact of the lower cost base following the restructuring programme.
Revenue expanded to €2.7 billion in 2005 (€2.6 billion in 2004), with EADS Space Transportation, EADS Astrium and EADS Space Services all contributing substantially to this growth. At the year end, the Division’s order book stood at €10.9 billion (€11.3 billion in 2004), instilling confidence that growth would continue over the next few years.
Keen appetite for defence communications
Germany joined the UK as a customer for Space Services, selecting EADS as preferred bidder for the contract to build and operate Satcom BW, its first dedicated military satellite system. As defence ministries deploy more troops overseas, they need secure satellite communications procured through medium-term build and operate contracts that minimise capital expenditure. In December, the UK upgraded its ground-breaking Skynet 5 military communications contract to include a third satellite.
Also within defence, the French government contracted EADS Space Transportation to develop the demonstrator for the Upper Stage of a ballistic missile, and EADS Astrium for a military satellite, confirming its willingness to prepare for the future of military systems with EADS.
Commercial businesses progress
Significantly, the powerful Ariane 5 ECA ten-ton satellite launcher achieved qualification in November, allowing it to launch next-generation large satellites, and to operate more profitably. Arianespace, in which EADS Space Transportation holds a 29% interest, carried eight satellites into space and won seven new contracts. Its Starsem subsidiary launched three satellites and won two contracts.
In a highly competitive market, EADS Astrium signed its first contract with SES ASTRA, the Luxembourg-based satellite operator, and has been awarded a contract by the Korean Aerospace and Research Institute to design and build their first multi-functional satellite COMS (Communication, Ocean and Meteorological Satellite), while three satellites were launched into commercial service. Anticipating the needs of satellite operators, in June EADS Astrium announced two new joint initiatives. Astrium is joining with Alcatel-Alenia Space to develop the Alphabus satellite, which will have the high performance required for next-generation multimedia and mobile telephony services. It also agreed with Antrix Corporation, the commercial arm of the Indian Space Research Organisation, to jointly develop and market lower performance communications satellites.
Enlarging its European footprint, in December the Division acquired Dutch Space, the largest space company in the Netherlands, and will integrate it into Space Transportation.
Institutional stability
Development of Europe’s 
Galileo satellite navigation system remained on track, with the launch of the first of four test satellites in December. Galileo Industries, in which EADS has a 38% stake, is building three test satellites. In June, the two consortia competing to operate Galileo once it becomes operational around 2008, merged. The newly merged consortium, of which EADS is a member, is expected to receive the concession contract in 2006.
Agreement was reached on the locations for Galileo’s infrastructure, with the headquarters in Toulouse and operating functions in Germany, Italy, the UK and Spain.
Galileo’s satellite navigation system is expected to spawn a wide range of new applications for satellite navigation.
As a pioneer in secure satellite communications, the EADS Space Services Business Unit is well positioned to capture new contracts in this expanding market. Additionally, the Division’s commercial businesses have product offerings suited to their customers’ evolving needs following qualification of the powerful Ariane 5 ECA ten-ton launcher, the proven reliability of its modular Eurostar 3000 satellites and agreement to develop the high-performance Alphabus satellite. Finally, the institutional outlook is stable after the European Space Agency (ESA) Ministerial Council meeting of December 2005 agreed budgets for the next four years, and the Galileo project continues to indicate Europe’s determination to maintain independent access to space.
In the year ahead, the Division will continue to grow in revenue and EBIT. EADS Space Transportation and EADS Space Services will lead a robust expansion in revenue. Cost improvements in Astrium and Space Transportation, planned from streamlining operations and greater efficiencies in supply chains, will create better margins. These improvements in revenue and margins will feed through to higher EBIT.
