'No talks with GEC' says BAe

Dick Evans, chief executive of British Aerospace, yesterday dampened speculation about an alliance with GEC with a public denial that the two companies where in strategic talks.

The two defence groups regularly discussed projects in which they were both involved, "but there are not structural talks of a fundamental nature."

Mr Evans restated that BAe would seek more partnerships, but these were likely to be in the context of pan-European consolidation to compete with the giant US defence groups.

BAe, which yesterday reported pre-exceptional profits up 95 per cent to pounds 330m, has been negotiating with French and German defence groups to reduce overcapacity in Europe.

Mr Evans welcomed last week's announcement by France to restructure its defence industry as paving the way towards further integration. But he said BAe was not interested in creating a "fortress Europe" in the industry. "The Europeans are simply trying to speak to Americans on equal terms."

He would not give details on any potential partnerships or their timetable. "National, political and economic behaviour will determine the type of partnerships that BAe will seek. The industry is in a major state of change."

Mr Evans was speaking after the release of BAe's annual results which he said reflected the successful strategy of focusing on core defence and aerospace businesses.

Defence operations saw a profit before interest of pounds 487m compared with pounds 412m in 1994. The results also showed an improving trend at Airbus and lower losses from commercial aircraft, down from pounds 156m to pounds 118m before interest.

Mr Evans said: "The regional jet market continues to improve and I would expect this division to break-even by 1997."

Airbus, in which BAe is a partner, had not yet decided whether to go ahead with building the AXXX large aircraft. BAe was interested, nor had it held discussions, about raising its stake in the European consortium at this stage.

Mr Evans also ruled out suggestions that BAe might go to the aid of the failed Dutch aircraft manufacturer, Fokker.

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