Europe's aerospace industry has finally reached the crossroads it has been heading toward since Lockheed Martin gave notice in the early 1990s that a seismic shift in company ownership was about to shake the old order of doing business.
The merger of DaimlerChrysler Aerospace and Aerospatiale Matra, coming in the wake of the British Aerospace tie-up with Marconi Electronic Systems, may have cleared the way for a sensible division of the civil and defence spoils in Europe. Importantly, it has also broken the logjam which has stymied progress towards creation of a commercially independent Airbus.
The European Aeronautic, Defense and Space Company (EADS) which will replace the Franco/German companies is not the final word as far as the European vision of a single giant military, space and civil aviation conglomerate is concerned. In retrospect, particularly in view of the problems merger mania has brought to Lockheed Martin and Raytheon, the big bang theory of a three-way merger between Aerospatiale Matra, BAe and Dasa was an undertaking all three did well to avoid, if only by default.
Now, via a rather circuitous route, the European aerospace industry at last stands on an equal footing with US rivals. It could even move ahead of the USA in the size and scope of its merged companies given that similar activities in the USA hit the buffers when the government blocked Lockheed Martin takeover of Northrop Grumman in 1998. Europe, for now seems unconstrained by such considerations and could see additions yet to the structures of New BAe and EADS as companies, notably Alenia, seek to attach themselves to one of the new alliances.
What New BAe does next is a crucial issue. From the outset its inclination has been to look for a transatlantic alliance and the feeling it was moving in this direction has been enhanced since its decision to take over Marconi.
The Franco-German merger may give room for reconsideration once the dust has settled and EADS sorts out the problems bound to beset an operation spanning France, Germany and Spain. Combat aircraft builder Dassault Aviation sits uncomfortably alongside a predominantly civil EADS business. New BAe is predominantly a defence manufacturer. What to do with Dassault will become an increasingly urgent issue for France in the next millennium. Europe's political interest would be best served by combining New BAe and Dassault into a single entity. Whether it will serve the business interests of New BAe is another question.
Source: Flight International