F 
R

1
1
- 
9 
8

---

Home | Update | LATEST ISSUE | Gallery | FR Profile | Datafiles | FR 11/98

RESTRUCTURING T HE EUROPEAN AEROSPACE INDUSTRY: JUST HOT AIR?

Airbus Industrie is not able to fulfil the deadline for its change into a single corporate entity. During the Farnborough air show the ministers responsible for Airbus affairs, Peter Mandelson (UK), Jean-Claude Gayssot (France), Josep Pique i Camps (Spain) and Günther Rexrodt (Germany) announced that the start for the restructuring program, originally planed for January 1999, is not to be expected before the middle of the same year.

The politicians did not mention the reason for this delay, but it was easily recognisable for all participants: the partners still cannot agree on a 100 percent privately owned business. France is blocking.

"We have not advanced a single step further than we were at the beginning of this summer in Berlin", a source close to the talks revealed. "What those people are doing here is nothing more than coffee-table talk", a disgruntled colleague commented.

Both claims hit the point. Everything depends on France and the country's final understanding that a privatised Airbus Industrie can only operate successfully under optimal commercial circumstances, just like a future integrated European aerospace industry. The fact that this insight, often demanded by the German Daimler-Benz Aerospace as well as British Aerospace, is missing on the French side seems to be caused by the wish of the French delegates to ensure the "Grandeur" of their "Grande Nation".

Therefore, the French are facing a serious dilemma. On one side, the people responsible in Paris are conscious of the necessity of a restructured Airbus Industrie to cope with the centre of power created by the US aerospace industry. On the other hand, the political leaders are obliged to (state)control the existence of jobs in the country, as the French public apparently demanded by their vote for the present government.

Furthermore, the French workshare within the Airbus consortium is not to be called the most economical. In a fully privatised company structure with its necessary emphasis on shareholder value, the eventual board of directors could decide that the cockpit and fuselage sections may not continue to be produced in "expensive" locations like St. Nazaire or Nantes, but could be built much cheaper by new partners in Finland or Italy. But then the socialist prime minister Lionel Jospin and his secretary of economy and finances Dominique Strauss-Kahn would have to break their election promises.

Since this is not an option for them, the political and industrial leaders of France do not want to let their participation in the new structure drop below a certain amount of influence.

This is why the government's share still remains on a defined level which offers a distinctive veto privilege, despite all the noise over possible privatisations during the recent months (Aérospatiale/Dassault, Thomson CSF/Alcatel/Aérospatiale, Aérospatiale/Lagardère Matra Hautes Technologies).

The same also applies to the future European Aerospace and Defence Company EADC. In this even more complex task in comparison to the Airbus restructuring the French position will not change either. On the contrary: France is using the inflexibility of its own system as a means of pressure against the unpleasant persistence with which the partners in Munich, Bonn and London cling to the principle of market economy. The French message is loud and clear: "we can wait".

But exactly this is not possible regarding the events across the Atlantic. Therefore after months of threats Dasa and BAe finally planted rumours that they had already agreed upon a common advancement without France. Though even if the leaders at the Seine river were to give in to the pressure and consequently abandon their position, thereby opening the way for investors, it would still remain doubtful if a company would acquire shares of an object to be privatised together with the cost of an adherent social plan.

As simple as the word "restructuring" is spoken, as difficult the process of employing it may be. In Seattle, Boeing is starting a kind of stage play with chances of becoming a classic.

Will Europe come up with a second act? If Aérospatiale sticks to its behaviour chances are good. Europeanization does not mean relinquishment of individuality, but neither extortion.

From page 4 of FLUG REVUE 11/98