Andrea Spinelli/GENOA
STATE-OWNED Finmeccanica is negotiating a possible rationalisation of the Italian aero-engine business with the Fiat Group.
A successful outcome to the talks would see Fiat Avio merge with the smaller Finmeccanica operation at Alfa Romeo Avio.
Previous attempts to marry the two businesses have been unfruitful, most notably in 1987, when a proposed barter deal swapping Alfa Romeo Avio for Fiat's train-building business was scuttled, mainly because of union opposition.
This time, the talks are understood to have started around the premise of a jointly owned company, but their objective has recently switched to the idea of Fiat offering cash for the complete acquisition of Alfa Romeo Avio.
Finmeccanica owns 77.5% of the company, with the remainder held by national airline Alitalia - with which Alfa Romeo Avio has a long-term agreement for engine overhaul. The engine business is no longer considered a core aerospace activity at Finmeccanica. Because all of its other major aerospace activities, (the company owns virtually all the major elements of the Italian industry), are in serious need of funds, a straight sale is seen as the best response.
Analysts believe that the Alfa Avio business, with a turnover of slightly more than L370 billion ($230 million), is worth around L180-200 billion. The company's main activities centre on the production of components and engines resulting from a string of deals with General Electric.
By contrast, Fiat Avio has an aerospace turnover of more than of L1,000 billion, gained from programmes such as the Turbo-Union RB.199 and Eurojet EJ2000, the International Aero Engines V2500 and General Electric GE90. It is also an acknowledged leader in gearbox design.
Source: Flight International
