Friday, April 07, 2006

Bailing out?

The Airbus plant in Broughton, North Wales - the A380 wing facility is in the foregroundBearing in mind that the only source of this story is the BBC, one has to be a little bit cautious. But if it is really true that BAE systems is to sell its 20 percent share in Airbus, this is pretty sensational news.

Mind you, the possibility has been rumoured several times of late, most recently last month when it was suggested that BAE Systems was about to sell its stake to fund a bid for U.S. defence firm L-3 Communications Holdings Inc, but this is out of the blue.

The BBC says that the stake is expected to be bought by EADS, which is only to be expected, the consequence of which will be that there will no longer be any British ownership of the huge manufacturing sites at Broughton in North Wales and Filton near Bristol.

And a product made by BAE Systems - the Airbus A380 wingEither way, the news seems to have caught the unions by surprise. According to the Channel 4 website, urgent talks are being sought by the unions representing the 13,000 British Airbus workers. Possibly, also, the news has caught Airbus by surprise, as one of its spokesmen at its Toulouse, France, headquarters has said: "We have no information about this."

The implications of this move, however, go far wider than just the employment consequences. One wonders whether it will affect the RAF's air tanker contract and whether the proposed purchase of the military airlifter, the A400M, will be affected. Then there is the question of all those billions of subsidies that the UK taxpayer has put in to Airbus.

Most of all, one wonders whether, after our previous post on the woes of Airbus, BAE Systems are choosing this moment to bail out in the expectation that things can only get worse.

Doomed to failure? - the Airbus A350That idea can only be reinforced by a piece yesterday on the North Wales Daily Post webiste, which has Steven Udvar-Hazy, chief executive of International Lease Finance Corporation, calling on Airbus to scrap its plan for the A350, the rival to Boeing's hot-selling 787 Dreamliner.

According to Flight International Udvar-Hazy sees the A350 as a response by Airbus to being "stunned" and "caught a little bit behind the power curve" after Boeing shifted gears from the Sonic Cruiser plan to developing a new family of aircraft with the 787. It now risks being left behind, despite a projected €4.35 billion development cost.

Boeing has so far won 343 firm orders for the 787, while Airbus has a mere 91 for the A350, suggesting that the another European dream is running into the sands.

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