BAe urges tough line on Airbus

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The Independent Online
British Aerospace is pressing the President of the Board of Trade, Margaret Beckett, to take a tough line when ministers from the four Airbus partners meet in Paris next week to discuss progress towards turning the aircraft consortium into a commercial company.

Mrs Beckett was yesterday briefed at the DTI's headquarters by Sir Dick Evans, BAe's chief executive, and Michael Turner, head of its commercial aircraft division, ahead of the crucial meeting at the Paris airshow on Monday.

The election of a left wing French government under Lionel Jospin has raised fears that the views of its Airbus partner, Aerospatiale, may be given greater weight in decisions about the consortium's future.

Yves Michot, the Aerospatiale chairman, has been making increasingly dubious noises about the prospects of turning Airbus into a plc by 1999. Last month he said that if BAe and the German partner, Daimler Aerospace, teamed up to take control of the French defence electronics group Thomson- CSF then it would signal the "death warrant" for Airbus.

More recently he has suggested that Aerospatiale and its partners have agreed the outline of a deal to merge their civil and military interests into a single grouping but one which would have no asset base but operate as a marketing organisation.

BAe will want Mrs Beckett to seek reassurance that Airbus remains on track to become a fully commercial entity in 1999 with its own asset base, management structure and power to purchase components from whichever supplier is the most competitive.

One of the most contentious issues to resolve will be the valuation of the respective assets the four partners contribute to the new commercial Airbus.

The Paris meeting is also likely to review the request from Airbus for funding to develop a stretched version of the A340 long-range jet. BAe has put in a submission for launch aid of about pounds 130m-pounds 160m. The Airbus partners are also close to deciding which engine supplier to select for the project. Rolls-Royce is vying to be sole supplier with a version of its Trent engine in competition with the US manufacturer Pratt and Whitney.

Mrs Beckett will be at Rolls Derby engine factory today when the company officially announces that it has been selected as part of the International Aero Engines consortium to supply engines for the $1bn fleet of 20 Airbus A320s and A321's ordered by British Midland.