City: Soft landing

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ATTEMPTING to call the bottom at British Aerospace is dangerous. Just as you think the shares can fall no further, along comes another piece of bad news and they suffer still more. Since the company's doomed rights issue last autumn, the shares have nearly halved to their present value of just over 200p. BAe's fortunes have plummeted so badly that any week now it will be kicked out of the FTSE-100 share index. Its stock price has fallen so far that BAe's market capitalisation is now bettered by the likes of far smaller rivals like Smiths Industries.

What ignominy for Britain's largest manufacturing employer. You can't help but feel however that the gloom is overdone. The share price is being driven more by fear than reality. Some analysts are saying BAe has no viable future at all. Only Lord Weinstock's GEC can save it now. I can't agree. If the company closes down its regional aircraft interests, provisions of around pounds 750m are going to have to be made in the interim figures, due mid-September. But if the aircraft leasing operation is kept going, as it may well be, provisions will be trimmed to more like pounds 300m. Admittedly this is bad enough, but with pounds 700m of cash in the balance sheet (thanks to advance payments on defence contracts from Saudi Arabia) it's hardly going to push BAe into receivership.