Andrew Doyle & Laura Hailstone/LONDON
Newly launched BAE Systems aims to secure a bigger stake in Airbus Industrie when the consortium is transformed into a single corporate entity. The size of the holding will be based on new valuations of the partner companies' Airbus assets and will be determined in negotiation with the European Aeronautic, Defense and Space (EADS) company.
The UK company, formed last week from the merger of British Aerospace and Marconi Electronic Systems (MES), is overwhelmingly defence-led, but is pledged to continued involvement in Airbus, having identified commercial aerospace as one of three key growth areas, alongside defence systems and customer support. It has also indicated its commitment to the A3XX ultra-high-capacity airliner project.
BAE holds 20% of the loss-making Airbus Groupement d'Intérêt Economique, but makes a profit from building Airbus wings. The other 80% is held by EADS when it is formed by the merger of Aerospatiale Matra, DaimlerChrysler Aerospace and Spain's CASA. "We are at least as efficient as the other partners and I also know our workshare is more than 20%," says BAE chief operating officer Mike Turner.
Turner says that EADS should nominate a negotiating team in a few weeks to resume discussions on the restructuring of Airbus, with its establishment as a single corporate entity (SCE) expected to save the partners "billions of dollars" in procurement and production efficiencies.
BAE chairman Sir Richard Evans warns the Airbus revamp is "going to be quite a difficult and tortuous process", but says EADS will want to settle the SCE question before it makes a planned initial public offering next year, and that the matter should be settled "long before May or June".
Chief executive John Weston says the launch of the A3XX is also a top priority. But BAE indicates that it sees linkage between the launch of the aircraft - expected to cost up to $11 billion to develop - the SCE transformation, the granting of launch aid by the UK Government and sufficient demand from airlines.
Turner says BAE is proceeding with the Avro RJ-X regional jet programme, although it has yet to secure a launch customer.
Despite this continued commitment to civil aircraft production, the renaming of the business as BAE Systems reflects the emergence of defence systems integration as its core activity. The company is the world's second largest defence contractor and ranks fourth in overall aerospace/defence turnover, just behind EADS. It has more than 115,000 employees, an annual turnover of £12.3 billion ($20 billion) and a £37.5 billion orderbook.
The restyled company drops the British Aerospace name, which it has held since its formation in 1977, reflecting its global ambitions and diversification beyond aerospace.
Weston adds that BAE is "well positioned for further European and US moves", and "just one step away from our goal of being a significant part of the leading global player in our business".
Source: Flight International
