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Airbus Defence & Space eyes rising military budgets in 2018

By Jens Hack

MUNICH (Reuters) - European aerospace group Airbus <AIR.PA> is reckoning with rising military spending after U.S. President-elect Donald Trump called NATO into question, the head of the group's defense and space unit said in an interview.

Trump this week described NATO as obsolete because it had not defended against terrorist attacks, drawing concern across the 28-member alliance.

Dirk Hoke, head of Airbus Defence & Space, said he believed European countries would intensively discuss the future of NATO.

"This discussion is long overdue when you consider that only five countries in Europe meet the goal of spending 2 percent of GDP on defense," he told Reuters from Davos.

He highlighted Germany has agreed to add 10 billion euros ($10.7 billion) to its defense budget, though the country was still far from NATO's 2 percent target, and said he expected more joint procurement between countries.

"I think we will see changes to budgets in 2018," he said. "We can see from ongoing discussions that our home countries are more prepared to do so."

Airbus has long called for European countries to cooperate on defense procurement. Hoke said it made no sense for European countries to use three different fighter jets - the Eurofighter, Rafale and Gripen.

He also said the industry and governments needed to do more to upgrade weaponry in shorter intervals.

"Procurement cycles of 20-30 years are not suitable for fast-changing situations," he said.

Airbus Defence & Space enjoyed a good 2016, Hoke added, with growth across all its divisions.

(Writing by Victoria Bryan; Editing by Ludwig Burger)