Airbus partners may pay BAe in deal to create single company

British Aerospace is in line for a substantial payment from its Airbus partners after they agreed yesterday to pool production facilities and maintain their shareholdings at existing levels when the consortium converts into a single commercial company in 1999.

The agreement to transfer manufacturing operations into the new company along with engineering, testing, procurement and customer service activities is a crucial first step on the road to the restructuring of Airbus.

A binding memorandum of understanding signed yesterday by the four partners will enable Airbus to operate as a fully commercial entity as opposed to the sales and marketing organisation that it presently is. But the pooling of production assets is likely to lead to financial compensation being shared out among the partners.

BAe, which makes wings for the Airbus family at its Chester plant, has a 20 per cent stake in Airbus. Aerospatiale of France and Daimler Benz of Germany each have 37.9 per cent and Casa of Spain has 4.2 per cent.

However, BAe is likely to argue that the efficiency and profitability of its own Airbus facilities will make them worth more than 20 per cent of the equity when Airbus converts.

Rather than fiddle with the existing shareholdings, the partners will determine respective valuations for the assets each company is contributing. The Belgian arm of accountants Price Waterhouse is conducting an audit at all four Airbus partners with the aim of drawing up a pro-forma set of accounts by the end of the year.

This is likely to lead to compensation being paid. One estimate is that BAe could be in line for payments worth up to pounds 400m. An alternative would be to adjust the basis on which Airbus shares out profits. Because BAe did not join the consortium until the early 1980s after the Airbus A300 had already been launched, it does not receive one-fifth of annual profits. The profit sharing formula could be amended to take account of the differing assets contributed to the new entity.

The assets to be contributed and their valuation will be decided by the end of 1997, Airbus said. The other tasks to be completed this year include drawing up a new management structure and deciding where the company will be registered. The four partners will also have to resolve the tax implications of converting to commercial status.

There had been reports that the French were less keen than the British or Germans to transfer production facilities into the new company. But industry sources rejected this, suggesting Aerospatiale's main concern was not with the principle of pooling assets but with the timing of it, being anxious to ensure it did not happen until its merger with Dassault was completed. "The MOU signed by the partners is a very good compromise which satisfies everyone," said one source.

The restructuring will enable Airbus to overhaul its efficiency levels and procurement policy in a move that is likely to result in several thousand job losses across Europe.

Airbus will also be able to tap world financial markets for funding for projects such as the 600-plus seater A3XX super-jumbo.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea