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Boeing merger may speed Airbus restructuring

December 17, 1996

PARIS, France (AP) _ As Airbus faces being dwarfed by the combination of Boeing and McDonnell Douglas, the European aircraft consortium is under new pressure to transform itself into a stockholder-owned company.

``For several years, the competition was only between Boeing and Airbus anyway,″ spokeswoman Barbara Kracht said Monday from Airbus’s headquarters in Toulouse, France. ``This will continue, but now the competition will be even more lively.″

Talks to turn the consortium into a publicly traded company are likely to accelerate as a result of Sunday’s announcement of the U.S. merger, Kracht said. Different from its rival, Airbus merely handles marketing and design for its four independent members.

Airbus, with a one-third share of the commercial aircraft market versus about two thirds for Boeing, has lost a major opportunity by not restructuring earlier, said Zafar Khan, aerospace specialist at Societe Generale in London.

``If Airbus had been a company, it would have been in a position to buy out or merge with the civil side of McDonnell Douglas,″ Khan said. ``But it couldn’t, since it is a `virtual company.‴

The consortium members _ Germany’s Daimler-Benz Aerospace, Aerospatiale of France, British Aerospace and Construcciones Aeronauticas of Spain _ work together to produce aircraft but also pursue their separate business interests.

McDonnell Douglas had long been seen as past its 1960s heyday in commercial aviation and the industry had been closely following three years of sporadic talks between the St. Louis_based company and Seattle-headquartered Boeing, Khan said.

Airbus’ Kracht acknowledged the consortium had not expected the merger so soon.

``This deal could frighten Lockheed Martin into doing a deal with Airbus, since it is the principal defense aircraft company in the world,″ said said Barnaby Wiener, aviation analyst at Merrill Lynch in London, referring to the U.S. company.

Among Airbus’s strategic plans in the works before the merger was a search for new partners to share the $8 billion cost of developing a new aircraft that could carry up to 650 passengers.

Airbus said earlier this year that it wants to change its legal status under French law to centralize its management, a transformation previously expected to take two years.

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