7 December 1998

Aerospatiale in Airbus stake row

By Roland Gribben

A row over a bigger shareholding for Aerospatiale, the French state aerospace group, in Airbus Industrie, the European civil aircraft consortium, is threatening European aerospace restructuring plans.

Demands from Aerospatiale for an increase from 38pc to 50pc in the Airbus partnership produced sharp differences at a meeting of the Airbus board in Toulouse on Friday and talks on reforming Airbus into a commercial business are now said to have "stalled".

They have also cast a shadow over plans for British Aerospace and Dasa, the Daimler Chrysler defence subsidiary, to merge to provide a more powerful European group to compete against American defence groups. BAe and Dasa, both Airbus partners, are in advanced merger discussions about creating a pan-European defence grouping. They wanted Aerospatiale to join in, but reservations about the state holding have been an obstacle and the French government has reluctantly acknowledged that BAe and Dasa will join forces without the French group.

A merged BAe and Dasa could end up with a combined 58pc stake in Airbus if the merger goes through but, as compensation to Aerospatiale, they are willing to reduce their holding and see the French stake rise to the 50pc. Aerospatiale insistence, however, on not only 50pc of the voting rights but 50pc of the profits has alarmed BAe and Dasa as well as Casa of Spain, the fourth partner, at a time when Airbus is profiting at the expense of Boeing, its long-time rival.

Dasa has accused Aerospatiale of attemping to "take Airbus hostage" and disrupting plans to turn the consortium into unified group by demanding half the capital. A spokesman said that because of the Aerospatiale demands it was unlikely that Airbus could achieve its objective of becoming a limited liability company next year. Aerospatiale disputes the Dasa version and denies that it has made any extra shareholding demand but industry sources say the French "do not want to play second fiddle" in a BAe-Dasa merger.

Friday's meeting was called to exchange documents tied to assessing valuation of the restructured business. The Aerospatiale spokesman said: "We asked prior to the exchange with BAe and Dasa whether rumours of their merger were true. They declined to answer."

Formation of a restructured Airbus and of a pan-European defence group are running in parallel but the French position has complicated and blurred the issue. There is now the prospect of two strong defence groups emerging, once centred on BAe and Dasa and the second an all-French line up involving Aerosptiale and Lagardere.

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