VZCZCXYZ0009
RR RUEHWEB

DE RUEHMD #0722/01 2010610
ZNR UUUUU ZZH
R 200610Z JUL 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 0960
INFO RUEHFR/AMEMBASSY PARIS 1537

UNCLAS MADRID 000722 
 
SIPDIS 
 
EUR/WE FOR STACIE ZERDECKI 
PM/DTCC FOR BLUE LANTERN COORDINATOR RACHAEL-THERESE S. 
JOUBERT-LIN 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC SP
SUBJECT: FAVORABLE BLUE LANTERN ON EUROPAVIA (LICENSES 
050097913 AND 050051555) 
 
REF: STATE 64206 
 
¶1.  (SBU) SUMMARY:  Pol-Mil officer, Econoff, and POL intern 
made July 9 site visit requested reftel to foreign consignee 
Europavia Espana, S.A. in connection with subject cases. 
Europavia officers were knowledgeable, forthcoming, and 
cooperative, and made a detailed presentation about the 
company's history and primary customers and suppliers. 
Ministry of Defense contacts confirm Europavia is a regular 
provider for the Spanish MOD, primarily for maintenance of 
airplanes and military helicopters, and that the company is 
registered with the Directorate General of Armament and 
Materiel (DGAM).  Europavia works frequently with European 
Aeronautic Defense and Space (EADS)-CASA, the global leader 
in aerospace, defense, and related services and Indra, and 
Europavia's role in these transactions is as a parts 
purchaser and distributor.  Europavia delivers the imported 
components as they are received from the manufacturer, with 
rapid delivery averaging one-day turn-around, and is not 
involved with their internal technology.  Europavia maintains 
strict internal controls on all inventory and on parts in 
transit.  More general information regarding Europavia's 
business dealings can be found beginning at para 5.  Please 
see a question from Europavia regarding International Traffic 
in Arms Regulations (ITAR) at para 8.  END SUMMARY. 
 
¶2.  (SBU) Regarding the specific post-shipment check 
requested, answers below are keyed to questions in ref A, 
para 4: 
 
-- Is Europavia Espana an official supplier/contractor for 
the Spanish MOD?  Does the company have any 
other contracts with the Spanish MOD that involve the 
procurement of USML items? 
 
Captain Eladio Ferreiro, Head of the Export Control Unit 
within the Directorate General of Armament and Materiel 
(DGAM) at Spanish MOD confirmed July 7 that Europavia is a 
regular supplier, primarily for military aircraft 
maintenance, registered with DGAM.  Because the company 
contracts "habitually" with MOD for aircraft maintenance, 
some of the parts acquired in the United States are by nature 
USML-controlled items.  Europavia officers briefed Emboffs 
that the company has mostly maintenance contracts with the 
MOD, and that the Spanish ministry normally goes direct to 
defense components manufacturers.  There are currently no 
other open contracts for procurement of munitions list items. 
 
-- Can the company provide documentation from the Spanish 
Ministry of Defense (MOD) and/or the Spanish Air Force (e.g. 
purchase order, contract, or letter of intent) establishing 
it as the final end user of the USML items? 
 
Europavia provided Emboffs with extensive documentation on 
both subject cases, all of which can be provided via FAX to 
PM/DTCC upon request.  In support of license #050097913, 
Europavia provided the Spanish Army's repair request dated 
March 6, 2006; evidence that Eurocopter was not able to make 
the necessary repairs and turned to Europavia; Europavia's 
2007 repair quote and subsequent Eurocopter purchase order 
number 608/4300035296/02.07.2007; an end-use certificate 
signed by Rafael Garcia and provided to Goodrich Corporation; 
DSP-5 signed by Bruce Schwingler in April 2008; shipment 
record that accompanied the cargo from Los Angeles on May 2, 
2008; and invoices and packing slips for the winch delivered 
in working order on May 12, 2008.  The end-use certificate 
specified that Europavia place purchase order # N07/0214/M on 
Goodrich Corporation for the supply of helicopter rescue 
hoist systems to be installed on CH-47D operated by the 
Spanish Army. 
 
Europavia provided in support of license #050051555, an 
invoice from Indra for repair of a receiver/transmitter; 
e-mail correspondence related to export licensing to have the 
repair performed by L-3 Communications in Grand Rapids, 
Michigan; packing slips; and repair quotes. 
 
-- Have all of the items ordered on these licenses been 
provided to the Spanish MOD?  Does Europavia continue to hold 
any of the USML items? 
 
(Regarding case 050097913:  Are you familiar with Freight 
Forwarder Integral Transport Service, S.A. (Madrid)'s exact 
role?  Were there any additional foreign parties (e.g. 
consignees, freight forwarders, etc.) involved in this 
transaction?) 
 
All items have been provided.  Europavia does not continue to 
 
hold nor does it habitually store USML items, or any other 
components ordered on behalf of clients.  The only items 
presently in its small-volume warehouse are civil aviation 
products en route to customers.  Most equipment is delivered 
to the warehouse space that Europavia rents in the garage 
below its owned office space at calle Jorge Juan, 30 in 
Madrid, and subsequently leaves the space via courier 
services with global insurance.  In the case of larger 
materials, Europavia may instead inspect arriving freight and 
sign it over directly to a freight forwarder. 
 
¶3. (SBU) In the case of license #050097913 for the helicopter 
cargo winch, in answer to the question of whether the parts 
have been transferred to the MOD (ref A), as documented above 
and confirmed by MOD, they were received by Europavia and 
delivered May 12, 2008 to Eurocopter, thence via 
transportation agent and foreign intermediate consignee 
Integral Transportation Service, S. A. (a forwarding company) 
to the Spanish Army (not/not Air Force).  DGAM's Ferreiro 
clarifies said cargo winch was the property of the Spanish 
Army (FAMET), sent to U.S. company Goodrich for repair 
through Europavia and Eurocopter Espana (the Army's 
contractor), and subsequently returned to the end user and 
original owner, the Spanish Army.  In this an in other 
instances, Europavia sometimes buys direct and sells to the 
Spanish Army or, depending on the timeline and the 
circumstances of the sale, may sell to the Army via 
Eurocopter, a company that repairs Chinook helicopters.  In 
almost all such cases, Europavia is working directly with the 
Spanish military or with three major defense companies in 
Spain. 
 
¶4. (SBU) In the case of license #050051555, Europavia 
officers explained they signed the Letter of Intent (LOI) on 
June 13, 2007 in order to be able to procure parts via 
Caravan International (a seller with whom Europavia works 
only for large-volume contracts) for the Spanish MOD for a 
period of four to five years up to a value of USD $4 million. 
 The Spanish Army sought Europavia's assistance in 
guaranteeing delivery of critical parts for military 
airplanes and helicopters (ref A) as a "work-around" at a 
time when their negotiations with Boeing had stalled. 
Europavia officers briefed Emboffs that while still valid, 
the original LOI is no longer much used, because the Spanish 
Army is now procuring the intended maintenance and repair 
supplies via Foreign Military Sale (FMS).  DGAM's Ferreiro 
confirms that parts totaling only USD $23,084.82 (of the $4 
million ceiling) have been acquired and delivered to date 
under license 050051555, and that there has been no activity 
under this LOI since 2007.  Ferreiro notes that Caravan's 
license was tied to its LOI with Europavia, in essence an 
"open license" up to a stated financial limit for aircraft 
parts and components, "in order to avoid delays in material 
orders" that needed to be fulfilled in as given moment. 
Seven specific items, all ordered through Europavia N07/0249 
were supplied by EADS CASA or Indra Sistemas, S.A.  The 
entire order was requested and delivered the same day, on 
October 3, 2007, according to MOD.  The following parts 
valued at $1,527 received by Europavia from EADS had as their 
end user the Spanish Air Force's C-130 program: 
 
P/N MS9501-07     Bolt 
P/N 3313872-1     Pad, Pedal 
P/N 899981-2      Atomizer Assembly 
P/N 976761-1      Spacer 
P/N MS20073-03-05 Bolt 
 
The remaining parts ordered through Indra were installed by 
the Spanish Air Force in F-5s.  Indra program manager 
Virginia Hornillos and MOD's purchasing offices confirm these 
materials were delivered at the time of the order to the 
Spanish Air Force and should have been installed in aircraft 
a long time ago: 
 
P/N 064-104-7-61  Receiver transmitter          $15,922.20 
P/N 071-137-7-01  CD-413B VAL CTL         $ 5,635.62 
 
¶5.  (SBU) Europavia Espana was established in 1965 and 
currently employs 15 people in its Madrid office.  The 
company reported 120 million Euros in orders between 2004 and 
¶2008.  It is dedicated to the commercialization and 
distribution of equipment and high-technology systems and 
logistical management in the aeronautics and defense sectors. 
 Europavia is privately held, wholly owned by principal 
French shareholder Eurotradia International, a consulting and 
services industry which in turn is held by major European 
aeronautics, defense, electronics, and energy entities 
including Total, EADS, Thales, Dassault, MBDA Missile 
 
Systems, and Safran.  Their institutional structure and 
financial resources allow Europavia to take on any project 
acting either as distributors or as representatives according 
to their clients' interests.  Between 2004 and 2008, 
Europavia reported 88 million Euros as representatives 
compared to 31 million Euros in distribution activities.  The 
company's earnings have risen steadily an average of 18 per 
cent per year.  Repair and maintenance contract management in 
particular has risen nearly 30 per cent annually. 
 
¶6.  (SBU) Europavia officers told Emboffs they work with a 
number of suppliers and manufacturers, primarily French 
companies, and deal in logistics (including 
repair/maintenance and technical assistance contracts; buying 
and selling of components represents about 40 per cent of 
total sales); commercial promotion for commission (50 - 60 
per cent of sales, with the client responsible for all 
end-use assurances); and a small percentage of consulting 
business.  They are slightly more active in the private 
sector (approximately 55 per cent of sales) than in the 
public sector (primarily military clients).  The directors 
told Emboffs that Europavia was trying to break out of its 
reputation as the "French defense firm operating in Spain." 
Nonetheless, Europavia deals mostly in French-manufactured 
parts (80-85 per cent), and less frequently in U.S. parts. 
 
¶7.  (SBU) Although Europavia deals in civil aviation as well, 
military sales represent more than half of the company's 
business.  Europavia prides itself on its helicopter supply 
business, claiming it is capable of providing any system 
except for motors and cells.  Its helicopter clients include 
all three of the Spanish military services, the Spanish 
Ministry of Interior, and major private operators.  Europavia 
has also been involved in braking barrier installation 
projects at civil and military airfields throughout Spain for 
the past ten years. 
 
-- Does Europavia Espana understand the restrictions on USML 
items (especially the prohibition against unauthorized 
re-transfers, re-exports, or changes in end use)? 
 
Yes.  Nonetheless, Europavia acts as a consultant and advisor 
in most of its procurements deals and specifies that DSP-83 
compliance responsibilities rest with their end-user clients. 
 
 
¶8. (SBU) Europavia's General Director Rafael Garcia Tudela 
further sought Post's assistance in clarifying when its 
transactions might be subject to end-use prohibitions. 
Garcia posed questions regarding the ITAR list for 
significant military equipment (SME) and dual-use items 
versus "spare parts" deemed not subject to end-use 
certificates.  If the manufacturer does not ask, Europavia 
assumes a DSP-83 is not required.  Garcia needs to advise 
clients that parts described as "stock" may not be 
immediately available if they are subject to U.S. 
restrictions, which could result in a four-week delay.  When 
does a given aircraft part "count" if the same equipment can 
be installed in either military or civil aircraft?  How can 
the company determine whether the parts it is requested to 
obtain are contained in the USML?  Europavia's team shared 
DSP-83s and other paperwork related to April 2009 and May 
2009 orders for spare parts (cicuit card assembly amd power 
supply) for maintenance activities for a Lockheed C-130 
Hercules aircraft operated by the Spanish Air Force and close 
tolerance screws for the Spanish Navy, respectively, and 
sought Emboffs opinions of whether everything appeared to be 
complete and in order.  NOTE:  Post would appreciate a direct 
PM/DTCP point of contact for Europavia in this regard, in the 
event they have additional questions or recommendations for 
periodic review of the list.  END NOTE. 
 
¶9. (SBU) -- Who are Europavia Espana's other customers, what 
is the nature of their business, and where are they located? 
 
Europavia works primarily with the Spanish Air Force and EADS 
CASA, which together represent over half of Europavia's 
sales.  Other clients include, on the public side, the 
Spanish Army and other defense and security entities.  In 
addition to EADS, Europavia supplies Spanish shipbuilder 
Navantia, aeronautical operators, the Spanish airports 
administrator AENA, and Eurocopter Espana.  Europavia also 
has business with the Basque Police.  Madrid staff of the 
U.S. Commercial Service (USCS) confirm that Europavia is a 
company in good standing representing several U.S. firms in 
Spain.  Senior International Trade Specialist Carlos 
Perezminguez describes Europavia director Miguel Angel Tapia 
as "one of the best professionals in this sector" and adds 
 
the company enjoys an excellent reputation.  USCS is familiar 
with Europavia based on previous inquiries on behalf of U.S. 
companies including Dillon Aero, and has included Europavia 
in past "Gold Key" meetings with U.S. companies seeking 
partners in Spain.  Representatives from Europavia were 
invited by USCS to attend the reception at U.S. Embassy Paris 
during the June 15-21, 2009 Paris Air Show at Le Bourget. 
Europavia Espana represents select Japanese, German, Italian, 
and UK firms as well as a long list of French suppliers.  Its 
U.S. representations include American Fuel, ETC, Microstrain, 
Engineered Arresting Systems Corporation, Cobham Defense 
Electronic Systems, Defense Technology Equipment, and 
Goodrich (both French and U.S. subsidiaries). 
 
CHACON