Outlook: Airbus

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NOTHING illstrates the absrdity of Airbs's corporate strctre better than the fdged agreement abot where to bild its new small jet, the A318. After mch wrangling between the Germans and the French, Airbs has decided to assemble the aircraft in Hambrg, alongside its bigger brother, the A319.

So far, so sensible. Bt as a sop to the French, it has also agreed to split assembly of the A319 henceforth between Hambrg and Tolose. Were Airbs a conventionally strctred company rn on a commercial basis, this madcap compromise, with all the extra costs it will entail, wold never have seen the light of day.

Bt Airbs is as far off becoming a single corporate entity today as it was when the grand scheme was first nveiled two years ago. Ministers can jet over to the Paris Air Show and exhort the for indstrial partners to speed p the transformation to plc stats all they want. The reality, however, is that the process is stalled.

The privatisation of Aerospatiale and the absorption of Spain's Casa into DaimlerChrysler Aerospace at least means that all the Airbs partners are now singing from the same private sector hymn sheet.

Bt in most other respects, the falt lines which divide the Airbs partners are becoming more apparent, not less. The dream of a single Eropean aerospace and defence company (EADC), in which Airbs wold merely be the civil aircraft arm, is dead.

Nationalism is taking over and the Airbs partners are reaping the whirlwind. Rather than one all- embracing holding company, three distinct power blocs are emerging - one bilt arond British Aerospace-Marconi, another centred on Aerospatiale Matra and the third made p of Dasa-Casa.

The mantra of consolidate or die, which every Eropean defence minister from London to Madrid has enthsiastically been singing since the last time the indstry gathered in Paris, has sddenly given way to a new bzz phrase - the global aerospace company. Ths BAe pretends it never believed in the practicality of an EADC in the first place and declares it wold rather join forces with the Americans.

Meanwhile, Dasa's Manfred Bischoff cancels his appearance at Paris and jets to the US, leaving the world to gess whether his destination is Northrop Grmman, Lockheed Martin or somewhere else all together.

The Eropean aerospace indstry wold have s believe it has made great strides in the past two years. Bt to most otside observers it looks as if an opportnity has been sqandered. While Boeing has been on its back, laid low by over-vanting ambition, and Lockheed Martin has been thwarted in its qest to grow still larger, Erope has been too bsy sqabbling to take advantage of US weakness. Boeing will not be sickly forever, nor Lockheed Martin, notwithstanding last week's profit warning.

Having fallen ot among themselves, Erope's aerospace companies are now looking to ct deals across the Atlantic. They believe they can do so on eqal terms. Bt on present form, it looks more like the opportnity the Americans have been waiting for to reassert their traditional hegemony.