Chris Jasper/LONDON
The future shape of British Aerospace is becoming apparent as the UK giant gears up for a restructuring of its management and corporate structure following approval of its merger with GEC's Marconi Electronic Systems.
BAe hopes to announce details of the changes before the end of the year, when it aims to be in a position to formally launch itself as a 'new' company. The company confirms it has hired consultants to explore a name change. Chief executive John Weston says he already knows what the new structure will look like and that "it will be quite radical".
Announcing positive results for the last six months, Weston stated that the company is one more merger away from becoming the global player it aims to be, adding that the move would be a transatlantic one. And though BAe does not entirely rule out a merger closer to home, its own view on future European consolidation does not envisage such a move.
The company's one unresolved European acquisition question concerns Alenia Marconi Systems, inherited via Marconi. The UK company had originally hoped to incorporate the joint venture, but Alenia parent Finmeccanica resisted such a move, and BAe is now close to sealing a deal which will expand the business to include some of its own activities while keeping it as a joint venture. Weston says Finmeccanica is prepared to see Alenia merged along sectoral grounds, and plays down the possibility of BAe taking an equity stake in the Italian player.
BAe's strategy also focuses squarely on the defence side of its business, and though Weston refutes suggestions that the company would contemplate exiting the civil sector or selling its Airbus wings operation, BAe is equally adamant that it will not commit to launch of the A3XX - on which Airbus is staking its future - without securing maximum launch aid.
BAe would be expected to make a contribution to A3XX launch costs (estimated at $11 billion) equivalent to its 20% share in Airbus, but executive director Mike Turner says the company would require the maximum allowable government funding of 33% of non-recurring costs, to be repaid later, and would seek to raise a similar amount from sources including its own suppliers on the project.
"The key element will be the cost of the capital and a major part of that will be the government funding," says Turner, "and we have put an application in to the DTi [Department of Trade and Industry] and made it clear to them that it will be an important part of the decision process."
By reining in its contribution to A3XX launch funds, BAe would also minimise its exposure on a project that rival Boeing insists has no market. BAe itself is in no hurry to launch, saying deadlines imposed by Airbus governments are "always slipping". Although Airbus president Noel Forgeard is keen to offer the A3XX to airlines by the end of the year, the process will not be rushed, the company says.
Given that the governments are reluctant to grant funds without the restructuring of Airbus into a single entity, BAe's stance puts the onus on Aerospatiale Matra and Dasa/CASA, which could resolve the impasse by merging their own Airbus operations.
Source: Flight International
