Taiwan puts dollars 200m into BAe jets partnership

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The Independent Online
BRITISH AEROSPACE'S joint venture with the Taiwan Aerospace Corporation (TAC) to make regional jets came a step closer yesterday, after Taiwan's government agreed to lend dollars 200m ( pounds 121m) to help finance the partnership.

The government decided in a meeting over the weekend that the state-run Chiao Tung Bank and the Cabinet Development Fund would appropriate the money to finance Taiwan Aerospace's involvement.

Taiwan has signed a provisional agreement with BAe to form a new company to manufacture its 146 'whispering' jet and a twin- engined successor to the aircraft.

TAC, which is 29 per cent government-owned, has had trouble raising enough money for the joint venture because most of its private shareholders have yet to pay for all their capital shares.

The agreement with TAC forms part of BAe's pounds 1bn restructuring of its loss-making regional aircraft business, resulting in the closure of its Hatfield plant in Hertfordshire and 3,000 job losses.

The drastic action has been forced on BAe by the slump in civil aircraft sales brought on by the decline in air travel.

The recession in the airline business was further underlined yesterday when Swissair disclosed it is to cut 1,000 jobs, or more than 5 per cent of its staff, by the end of 1993.

In an interview with the newspaper SonntagsBlick, the airline's chief executive, Otto Loepfe, also gave a first hint that merger with another carrier could be a part of Swissair's long-term plans.

Swissair's chief problem in being competitive remains high staff costs, which make up 40 per cent of overall costs compared with 20 per cent at British Airways and less than 30 per cent at Germany's Lufthansa. It has already cut 400 jobs this year.

'We have to adapt to the worldwide economic slowdown, the enormous price battle in air transport and, from 1 January, the freeing of prices within the European Community,' Mr Loepfe said.

Analysts say Swissair, Europe's seventh-largest airline, is too small to compete successfully alone in an increasingly liberalised market, and yet too big to be a niche operator.