Defense firms see opportunity in cyber attacks

By Rhys Jones

LE BOURGET, France (Reuters) - A spate of high-profile online break-ins has given defense firms at the Paris Air Show a new sales pitch: cyber security.

Targeted by hackers looking to steal source codes, R&D information and trade secrets, aerospace and defense firms are turning the tables on the pirates and are making security a key sales argument.

"We see huge potential to do deals this week because interest in cyber security has soared given recent events," Paul MacGregor, general manager of Finmeccanica's UK security arm, Vega Consulting Services, told Reuters.

"Information is now used as a weapon and companies need to defend it at all costs or they themselves could lose out on contracts if they are seen as having weak defenses," he said.

Earlier this month, some of U.S. defense giant Lockheed Martin's systems -- home to sensitive U.S. defense technologies -- were hacked, while the Pentagon said that cyber attacks perpetrated by foreign governments could now be considered acts of war.

Other recent prominent attacks have targeted entities such as the International Monetary Fund, the Central Intelligence Agency and the U.S. Senate, as well as multinationals Google and Sony.

"When you see an airplane coming at you firing missiles, you can see it. This other threat, you have no idea whether they are there or not. That's why I don't sleep at night," Raytheon Chief Executive William Swanson told Reuters.

"Our opportunity is to make sure we protect ourselves, protect our products and protect those we offer services too."

Some defense industry insiders believe China-backed hackers are to blame, though China claims attacks are being perpetrated by rogue hackers, not government-backed agents.

Military communications contain sensitive information such as locations of aircraft and known faults, meaning it is "absolutely critical" defense companies have the highest level of security in place, Stuart Beattie, a manager at British cyber security firm AEP Networks, told Reuters.

"Multiple organizations will be looking at security contracts in Paris to protect against real and current threats," he said.

MILLENNIUM WORRY

On the eve of the air show, Louis Gallois, the chief executive of European aerospace and defense group EADS, told Reuters the company would plough hundreds of millions of euros into the creation of its own cyber security business in a bid to tap into what was a huge growth market.

Vega's MacGregor said: "Defense companies are following the cash into the cyber security market, which is currently worth billions of pounds a year."

He added that the future size of the market was almost immeasurable because of the pace it was building, in a way that was similar to the worries about the millennium bug in 1999.

The recent cyber attack on Lockheed Martin was perpetrated in part using data stolen from RSA Security -- itself a cyber security company, which makes the ubiquitous keychain fobs that generate constantly changing passwords for users logging into secure networks.

RSA, who suffered the attack in March, said the perpetrators had focused on finding information that could breach defense-related companies.

(Additional reporting by Victoria Bryan and Karen Jacobs; Editing by Geert De Clercq)