French a hitch to aerospace merger

The issue of state ownership is continuing to delay consolidation of Europe’s aerospace industry, according to a senior industry source. British Aerospace this week played down expectations of radical moves in the statement due shortly from European aerospace firms on the creation of a giant European aerospace and defence company. BAe, France’s Aerospatiale and Germany’s […]

The issue of state ownership is continuing to delay consolidation of Europe’s aerospace industry, according to a senior industry source.

British Aerospace this week played down expectations of radical moves in the statement due shortly from European aerospace firms on the creation of a giant European aerospace and defence company.

BAe, France’s Aerospatiale and Germany’s Daimler-Benz Aerospace have a 31 March deadline to submit proposals to their governments on how they would merge to meet the challenge of US competition.

A BAe source said the statement would be ‘unsensational,’ and confirmed the main issue dividing the firms is the question of Aerospatiale’s state ownership. ‘Our idea is that there should be a wider spread of shareholdings in the future European aerospace company,’ the insider said.

Another UK aerospace executive said: ‘The British and Germans have agreed on the technicalities of the thing, but they and the French haven’t agreed on the position of state shareholdings.’

One option would be to have ‘national structures feeding into a European aerospace company, with a publicly distributed shareholder base,’ he said.

Industry observers are certain BAe will refuse a company which does not include combat aircraft. Any statement looks set to announce agreement on the structure, or skeleton, but details will remain subject to negotiation.