View from City Road: Fighter project flies into fog
Wednesday 01 July 1992
On the face of it the Germans, as expected, decided to pull out of the project, leaving the UK, Italy and Spain to soldier on. But the Christian Democrat and Social Union parties voted to continue co-operating with Germany's EFA partners, which gave some of the British companies involved grounds for optimism.
The UK has consistently backed the programme but John Major yesterday raised the prospect of reviewing its involvement. Given that the contractors have been made acutely aware of opposition on cost grounds from the Treasury this could herald yet more uncertainties, or so the pessimists suggested yesterday.
In the fog, investors formed the judgement that it was bad news for British Aerospace, whose shares dropped a further 8p to 245p, making for a 103p drop in two months. But shares in other EFA contractors such as GEC, with a pounds 500m involvement, Smiths Industries and Rolls-Royce were largely unaffected.
The immediate financial damage is, however, limited. Development work currently under way has been paid for by the four governments and not by the companies themselves. It is a question of lost opportunity rather than uncovered exposure.
It is still possible that the UK contractors, principally BAe, will benefit from the decision if they receive a larger proportion of the work following Germany's withdrawal. BAe is building the front fuselage and cockpit and part of the right-hand wing. It might gain the contract for the centre fuselage, which was to have been built in Germany.
But this argument should be treated with some scepticism. The total size of the project is bound to come down and costs are under pressure, with or without Germany.
EFA fears have not noticeably depressed the relative share price performance of Rolls or Smiths over the past year. In the case of British Aerospace, which has underperformed by 60 per cent, the cost of walking away from regional aircraft is a more pressing concern than a scaled down or lost EFA.
- 1 Kermit the Frog has a new girlfriend named Denise
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 Moscow voted the world's unfriendliest city
- 4 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 5 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
The one chart that shows how George Osborne is almost certainly going to be our next Prime Minister
The excuses your boss is most likely to believe when you call in sick
Three-year-old ultra-Orthodox Jewish children told 'the non-Jews' are 'evil' in worksheet produced by London school
Bono's group has made more money from Facebook investment than from all his music
Wikipedia rocked by 'rogue editors' blackmail scam targeting small businesses and celebrities
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...