Daimler rejects overtures from BAe

The head of Daimler-Benz, the giant German aerospace and cars group, yesterday rejected plans being promoted by British Aerospace for the consolidation of Europe's defence and aircraft industry under a single holding company.

Jurgen Schrempp, the Daimler chairman, said he backed the creation of joint companies in specific sectors such as missiles and fighter aircraft. But he was dubious of the idea of forming a holding company to oversee the consolidation. "I want operating companies. I have problems with holding companies," he told a conference in London where Daimler was announcing first-half results.

Daimler is a partner of BAe on the Airbus civil aircraft programme and the Eurofighter project and at one stage discussed the idea of cross-shareholdings to create a united European defence and aerospace business. Mr Schrempp said it was even more vital now that Europe's defence industry consolidated following the merger of Boeing and McDonnell Douglas in the US.

The Daimler chairman said that without consolidation Europe's defence and aerospace industry would have "no chance against the Americans".

Daimler announced that first-half operating profits had more than doubled from DM800m (pounds 265m) to DM1.8bn.