The sale of BAE Systems' 20 per cent stake in Airbus came under attack yesterday as shareholders in the UK defence manufacturer accused it of putting jobs and the future of Britain's civil aircraft industry at risk.
Shareholder after shareholder stood up at BAE's annual meeting to denounce the sell-off. One investor said he "deplored" the decision and found it "quite inexplicable" given the contribution Airbus made to the group's profits. Another voiced concerns that it would leave the group unbalanced and increasingly reliant on the US defence market.
Other shareholders attacked BAE for not consulting them first before deciding to proceed with the Airbus sale, which is expected to fetch between £3bn and £4bn.
One said that BAE has benefited considerably from its civil aircraft inheritance. "If you give up the interest in Airbus we will have nothing left in that field," he added.
BAE decided earlier this week to exercise its "put" option, requiring the 80 per cent shareholder, EADS, to buy it out. The option kicks in at the beginning of June, at which time the two sides will appoint their own financial advisers to produce a valuation. They have 15 days to come up with a price. If the two sides cannot agree on a figure then an arbitrator will appoint an independent investment bank to decide on a valuation. This process will take a further 15 days and the decision of the bank will be binding.
Dick Olver, BAE's chairman, denied that its decision to sell would have any effect on the 125,000 UK jobs which are dependent on the Airbus programme. Referring specifically to Airbus plants at Broughton, in North Wales, and Filton, in Bristol, which make wings for Airbus aircraft, Mr Olver said: "In my opinion, if support is there from the UK government, those jobs will be fine."
The meeting also heard repeated attacks from shareholders on BAE's involvement in the arms trade and, in particular, its role in supplying weapons to repressive regimes.
Several shareholders demanded to know whether BAE was still supplying parts for cluster bombs. Mr Olver denied helping make cluster bombs but acknowledged that BAE had supplied them to the Ministry of Defence from a company in Israel.
Meanwhile, it is becoming increasingly likely that BAE and VT Group will pull out of bidding for Babcock, the warship and support services group ahead of the 18 May deadline set by the Takeover Panel to "put up or shut up". BAE directors said they had been put off by the one-third rise in the Babcock share price since the possibility of a bid emerged last month.
A successful bid for Babcock would achieve the goal of creating a single UK warship builder, in line with MoD policy, but it would probably cost BAE and VT about £750m.
Senior BAE sources have indicated that is too high a price to pay, adding that there are other ways of achieving a unified naval ship business.