by Andrew Walden

Moving quickly after General Electric April 7 announced it was no longer interested in buying Ansaldo STS, the Italian government—part-owner of Ansaldo’s parent company Finmeccanica--ordered the ouster of Finmeccanica CEO Alessandro Pansa.  Ansaldo Honolulu, responsible for $1.4 billion in constriction and future maintenance of all Honolulu Rail cars and the driverless signaling system which will control them, is a joint venture of Finmeccanica subsidiaries Ansaldo STS and Ansaldo Breda.

The Finmeccanica Board of Directors April 14 elected Mauro Moretti CEO.  Defense News April 14, 2014 explains:

After Guarguaglini, Orsi and Pansa, Moretti is also the first CEO to come from outside the sector and he will require time to get up to speed, just as Finmeccanica struggles to compete in shrinking markets. He will also arrive in the wake of a centralization drive started by Pansa, which is due to hand more power to the CEO over Finmecanica’s units.

Government officials may have decided against promoting from within Finmeccanica due to the number of corruption probes into the firm. While Orsi’s trial for the India helicopter deal continues, Italy’s sale of helicopters and satellites to Panama is also due to be the subject of a corruption trial.

During his months of the job, Pansa fought hard to sell off Finmeccanica’s loss-making and inefficient railway unit, Ansaldo Breda. Analysts will be keen to see what Moretti does with the unit, having spent his career working in the Italian rail system.

At lease one European analyst speculates the new management team will now attempt to sell defense contractor DRS Technologies and keep the profitable Ansaldo STS.  What this might mean for the money-losing Ansaldo Breda division is not clear. 

Testifying before the Italian Chamber of Deputies February 10, now-ousted CEO Pansa explained:

Ansaldo Breda is "likely to jeopardize the future of Finmeccanica." ... Finmeccanica "can not do the restructuring" of Ansaldo Breda because "it is not economically and financially viable.  All the sacrifices made ... will be wasted on the performance of Ansaldo Breda.  The situation in which we find ourselves today does not allow you to ensure the survival, development and success to all companies in the group."  You do not run "the risk of having to think of more amputations or crushing the group 'if' the company is sold off.  In the long run, the current economic and financial situations are not compatible with a listed company on the market, every day is accountable to shareholders and lenders."

To prevent Breda from crushing Finmeccanica, Pansa had been pursuing a sale of the very unprofitable rail car maker Ansaldo Breda by linking it with the profitable rail signal firm Ansaldo STS. 

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Background: Bad Company: Honolulu Rail Car Supplier Ansaldo Breda May be Sold, Liquidated