Kevin O'Toole/LONDON Julian Moxon/PARIS

The French, German and UK Governments have called on Europe's aerospace industry to present a "clear plan and detailed timetable" for restructuring by the end of March, in a move designed to overcome the faultlines developing over the path towards creating a single major civil and defence grouping in the region.

The tri-governmental agreement, which emerged in the wake of joint visits by French president Jacques Chirac and prime minister Lionel Jospin to Germany and the UK, has won a cautious welcome from industry, with the hope that it may aid the negotiations now taking place over the transformation of Airbus Industrie into a Single Corporate Entity (SCE).

Aerospatiale, British Aerospace and Daimler-Benz Aerospace (Dasa) have all signed up to the concept of creating a single European grouping to rival the US giants, covering a mix of civil and military airframes, systems integration and defence electronics. The German and UK position has been to complete the SCE negotiations before moving towards this longer-term ambition, however, while France has been angling for the Airbus discussions to be made part of a grand European plan.

The French fnance minister, Dominique Strauss-Kahn, says that France will take "between 25% and 40%" of the new enlarged grouping around Airbus, depending on the evaluation of Aerospatiale.

BAe and Dasa privately believe that France hopes to use the SCE negotiations as leverage to establish its new defence-electronics and space grouping, built around Thomson-CSF, Alcatel, Aerospatiale and Dassault Electronique, as the core for European consolidation. That could be threatened by the rival grouping being established around privately owned Lagardère, through its Matra-Marconi Space and Matra-BAe Dynamics mergers, which Dasa soon plans to join.

A UK industry source concedes that the tri-governmental agreement "-gives a nod in the direction of the big-bang approach", but the source believes that it will do little to interfere with plans by BAe and Dasa to continue with their defence integration.

In a further twist to the restructuring, Lagardère/Matra president Noel Forgeard has been backed by the French Government to replace Jean Pierson as Airbus Industrie president. He promises to seal the integration of Dasa's space and LFK missiles units into the group before he leaves in March 1998.

At the same time, GEC has been in discussions with Alcatel over joining the defence-electronics grouping and plans to finalise its defence-electronics merger with Italy's Finmeccanica before the end of March.

Dassault's role in any future grouping also remains unclear, although the French Government's softening of the previous government's demand for a forced marriage with Aerospatiale allow the manufacturer to move its combat-aircraft activities closer to those of BAe. Dassault sources hold out the hope that they might also form an alliance with Dasa and Saab, initially through a marketing pact, which would eventually become the combat arm of the single European aerospace group.

Industry throughout Europe has welcomed pledges from the three Governments to support the creation of a new European grouping. "We undertake for our part to implement the necessary measures in national policies-to facilitate such restructuring," says their joint statement.

The industry warns that harmonisation in areas such as employment law, taxation, export rules and research spending is a necessity for any new cross-border European groupings.

Without clarification on these issues, Dasa warns that the politicians can only expect the March report to set out options based on various estimates of how the sociopolitical landscape will change in the next few years.

Dasa also calls for a common procurement policy across Europe to break the heavy reliance of defence businesses on national government customers.

Although the EC issued a common position paper on defence restructuring in mid-November, sources within industry describe its handling of procurement issues as "disappointingly naive". It is understood that the action plan has dropped off the European Union's agenda and is expected to be handed over to the Policy Armaments Committee when the UK takes over the presidency at the end of December.

Source: Flight International