DaimlerChrysler Aerospace (Dasa) has admitted that it was poised to unveil a merger with British Aerospace (BAe) last December before GEC offered a tie-up with its UK rival.

The German newspaper Handelsblatt quotes the company as saying: "We had everything prepared, right up to the press conference." The deal is on hold as the two UK companies continue talks on their own tie-up to create a £16 billion entity. Observers expect an announcement this month.

Following the last-minute hold up in the planned Anglo-German merger, Dasa and the French company Aerospatiale are moving to advance an amalgamation. Some reports say Thomson-CSF, who itself has been talking about a merger with GEC's Marconi Electronic Systems, is also involved. Talks have already taken place at chairman level, say reports.

Aerospatiale, BAe and Dasa have been in three-way talks about creating a single European aerospace and defence company since 1997. The UK and German companies recently opted to push ahead with a merger on their own while the French Government moved towards merging Aerospatiale into Matra Hautes Technologies and reducing its state holding in the operation to below 10%.

In the continuing unfolding of European merger manoeuvring, Dasa has admitted that talks with French industry have intensified this month but denies pressuring BAe to consumate a bilateral tie-up. "It's a move from the French side," says Dasa.

The French Government denies pressing for talks with Dasa to be re-opened. Defence minister Alain Richard says, however, "we have let Dasa know that if they want to talk things over with us, we will be there".

Meanwhile Aerospatiale, which will also soon include Dassault Aviation, has described its last year as a fully state-owned manufacturer as "pivotal" , and has confirmed that the merger and the accompanying partial privatisation is on schedule for the "first half of 1999".

The company broke all records for orders in 1998, with its highest total ever, at Fr86.8 billion ($15.8 billion), against Fr74.7 billion the previous year. The figure was a 42% growth on the forecast, mainly because of Airbus orders. The ATR regional aircraft business suffered a major decline, however, with just 21 orders during the year against 53 in 1997. Deliveries were unchanged at 35 aircraft, leaving the group with a falling backlog.

The Eurocopter helicopter business saw sales fall to Fr11.8billion against Fr13.9 billion he previous year, while missiles sales increased, setting a new record at Fr7.2 billion - Fr2 billion up on 1997.

Source: Flight International