EADS is set to reorganize some business units as part of a strategy review that could also see the European aerospace group change its name to Airbus, people familiar with the matter said on Thursday.

The shake-up aims to provide greater discipline and cohesion to disparate defence activities, but EADS is expected to abandon a long-term goal of balancing defence and commercial revenue after last year's failure of merger talks with BAE Systems.

The overhaul, to be discussed by the board at end-July, will try to balance investors' enthusiasm for Airbus jetliner revenue with the backstop of defence, but is likely to strike a pragmatic tone as Europe remains mired in uncertainty and debt.

"There will be some big announcements, but not necessarily a lot of strategy in this review. It is more to do with structure and profitability," said a person closely watching the process.

EADS has been under pressure from markets to give greater weight to its commercial operations led by planemaker Airbus, amid stronger than expected orders for jetliners during the downturn as airlines try to lower their fuel bills.

Many fund investors opposed efforts by EADS last year to merge with Britain's BAE Systems, a proposal that was eventually scuppered by political opposition from Germany. After the deal fell through, shares in the company soared.

EADS previously targeted a 50-50 mix between commercial and defence revenue by the end of the decade, but analysts say the failure of BAE talks spelled the end of "Vision 2020". Airbus makes up two-thirds of EADS revenue and is still growing fast.

A shake-up in corporate governance shortly after the collapsed talks gave more power to the company's management, led by Chief Executive Tom Enders who launched a strategy review.

The exercise is expected to try to steer a middle course, without ruling out too many options for opportunities that may arise once Europe emerges from its financial crisis.

"The BAE route is blocked and the pure-commercial route is too risky," said a person familiar with the discussions.

Among options being considered is greater overlap between the group's defence and space activities, several sources said.

Defence unit Cassidian helps build the four-nation Eurofighter combat jet and the Astrium space unit makes the Ariane rockets.

"There are important synergies between Cassidian's electronics and defence activities and Astrium's military satellites, and integrating them more would make sense," said analyst Christophe Menard at Kepler Cheuvreux.

"You can't think about defence electronics applications without satellite support, which is one reason why (France's) Thales and (Italy's) Finmeccanica do both."

AIRBUS BRAND BOOST

Enders faces the delicate task of reshaping and better-defining the defence activities, without disturbing the commercial narrative backed by investors who have driven up its shares 41 percent this year, after a 22 percent rise in 2012.

"EADS has realized that it is better-perceived with investors if it has a low exposure to defence," a banker said.

EADS defence-related revenue makes up some 12 billion euros ($15.71 billion) a year, more than twice that of Cassidian alone.

Eurocopter, the world's largest commercial helicopter maker, also supplies the military and Airbus has a foothold in defence through the A400M airlifter of Airbus Military.

To reflect an increased bias towards aerospace, the company has revived proposals to drop the name EADS - 13 years after it was born as European Aeronautic Defence and Space Co from a merger of significant French, German and Spanish assets.

Enders has long supported changing the name to Airbus Group and appears to have support of Airbus Chief Executive Fabrice Bregier, the sources said. Eurocopter's name could also go.

In both the reorganization and rebranding exercises, EADS could, however, be headed for friction with Germany, experts warn.

Berlin has strategic interests in Cassidian and has also fought what some close to Chancellor Angela Merkel see as rising French influence over the Toulouse-based planemaker Airbus.

Although the name Airbus was first registered in Germany, previous attempts to change the name were blocked by former core industrial shareholder Daimler AG, which until recently represented Germany's strategic interests in EADS.

With elections looming in Germany, any job losses at parts of Cassidian seen as most vulnerable to restructuring or being sold, such as some security activities, could also stoke tensions.

Changes must also be agreed by a newly independent board which is said to be anxious to see as much strategic impetus as possible in the new game plan to compete with Boeing Co.

Some do not rule out delaying a decision on the group's name until the basic direction and organization have been agreed. – Reuters