Airbus agrees key shake-up
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Your support makes all the difference.Airbus Industrie, the four-nation European aircraft manufacturer, yesterday agreed to the most fundamental restructuring in its 26-year history by announcing that it is to become a single corporate entity by 1999.
The decision means that it will abandon its status as a Groupement d'Interet Economique, whereby the four companies in the consortium act as work-sharing partners, and move instead to full commercial status with Airbus operating as a public limited company with its own assets and equity.
The eventual aim is a global flotation so that Airbus can raise finance on the capital markets for new projects such as the proposed 600-seater super Jumbo, which would cost at least $9bn to develop.
After a meeting of the Airbus supervisory board in Paris yesterday, the four partners - British Aerospace, Aerospatiale of France, Daimler Benz of Germany and CASA of Spain - said they would start negotiations immediately with the aim of reaching a binding agreement on the change of status by the end of this year.
There remain, however, huge obstacles to overcome, not least the assets each of the four partners put into the new Airbus and how they are valued. BAe has a 20 per cent stake compared to 38 per cent for the German and French partners and 4 per cent for the Spanish.
BAe will argue that because the assets it is contributing are more profitable than those of either the French or the Germans, it should receive some financial compensation. BAe could be due as much as pounds 500m from the three other partners.
Negotiations on the equity split are likely to dominate the next six months. The end of this year deadline set by Airbus for agreement on a Memorandum of Understanding may prove hopelessly optimistic.
Airbus has been pondering an overhaul of its structure - widely regarded as cumbersome and inefficient - for the best part of a decade but has always been held back by political friction and the differing philosophies of the four sponsor governments.
The consortium was set up in 1970 effectively as a marketing organisation with workshares divided up according to the stakes each partner holds. Converting to a plc would allow Airbus to contract out to the most competitive bidder.
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