The election of a socialist Government in France has thrown doubts on the privatisation of state-owned aerospace giants Aerospatiale and Thomson-CSF, and raised the possibility that the entire process will be delayed or even cancelled. Further uncertainties have been raised by the appointment of a communist at the transport ministry and a former finance hawk at defence.
The outgoing right-wing Government had set an end-of-June deadline for a decision over which of two rival bidding groups would gain control of Thomson-CSF. While the new Government has made no public comment, the timing now seems likely to change, if only because a complete review of previous policies is in process.
The socialists made clear during their election campaign that they are against privatisations. The new prime minister, Lionel Jospin, faces intense pressure, however, to go ahead with the original aerospace privatisation plans if French industry is not to be left out of wider European restructuring.
The proposed merger between Dassault and Aerospatiale could also be threatened, despite support from the new Government. Dassault president Serge Dassault insists that the deal will die if Aerospatiale is not privatised. Some government officials are now talking about a much bigger merger, also involving Thomson-CSF - a solution opposed intensely by many in the aerospace industry. "We must be allowed to restructure according to the market and not on the basis of political convenience", says one industry official.
Alcatel's bid for Thomson-CSF includes plans for a large French coalition including Dassault Electronique and, eventually, Aerospatiale. Lagardère is proposing a broader European grouping backed by British Aerospace and Daimler-Benz Aerospace.
Doubts have also been cast over France's future backing for further liberalisation of Europe's air-transport industry, with Jospin's choice of transport minister - the hard- line communist, Jean-Claude Gayssot. He is reported to be reluctant to privatise Air France.
The defence industry is also worried following the appointment of Alain Richard as defence minister. He has little experience of the sector, having been secretary of the senate Finance Commission since 1995, and is known as a rigorous budget cutter. Reviews of several programmes are inevitable, with possible effects on orders for major weapons systems.
Source: Flight International