Executives at Lucas Industries may resurrect plans for a management buy-out of the ailing aerospace division if the chief executive, George Simpson, moves to GEC.
According to sources at the company, existing and former Lucas managers - who seriously considered a similar plan last year - believe that the time could be right to try again to buy the aerospace side, which turns over more than pounds 500m a year, on both sides of the Atlantic
It is understood that the former managing director of Lucas Aerospace, Frank Turner, tried to put together an MBO last year but failed to raise the finance.
Lucas's aerospace business was at the time embroiled in litigation in the United States over false test certificates for faulty components which had been supplied to the US military. The company eventually paid the US government $88m (pounds 56m) and wrote off pounds 40m against the cost of restructuring the aerospace division.
Mr Turner stepped down from the company last October, amid widespread speculation that the divison had failed to get to grips with its American problems quickly enough.
Mr Simpson - who moved to Lucas from Rover Group only a year ago - is restructuring the aerospace division and the company has given heavy hints that it is up for sale. There will be further news about this restructuring on Tuesday, when Lucas unveils its interim results.
One Lucas source said: "There are many people in the aerospace division who feel it would perform better outside the group. I know there is talk about dusting off the MBO proposal."
It was not clear if Mr Turner would still be interested in taking part in a buy-out since is said to be considering a career in academia.
Financial problems at Lucas Aerospace have made it difficult to value, say analysts. Operating profits at the division fell from pounds 30.2m to pounds 13.2m last year, after pounds 16.4m was written off stock value. Two US operations were put up for sale. After exceptionals, profits for the group as a whole were pounds 30.4m, against last year's losses of pounds 129.7m, when the company made restructuring provisions of more than pounds 200m.Reuse content