Spanish construction group Ferrovial has launched a takeover bid for BAA, the monopoly owner of London”s three major airports. And just suppose the bid were successful, or indeed another investor enters the fray, would a new owner want to sell off little Southampton, and maybe Aberdeen, Edinburgh and Glasgow too? What are their plans for Stansted? A lot of questions need to be answered that will affect UK Ltd.
BAE Systems decision to dispose of its 20% share in Airbus also needs to be carefully scrutinized. Is it a brilliant move just at a time when the European consortium is at its peak and BAE can realize maximum value? Certainly there are big question marks over Airbus. Yes the A380 is about to go into service but the order book is currently static. The A320 series sells steadily but clearly Boeing have outmanoeuvred the Toulouse headquartered consortium with the 787 Dreamliner which is easily outselling the rival Airbus A350. Both Singapore Airlines and Emirates are calling for a rethink on the A350. Developed from the A330, in itself a compromise, an A340 with two engines instead of four, it is likely to be some years before production, with 2012 now suggested for first deliveries.
But could the share disposal eventually mean the end of major component assembly in the UK? No says BAE. Safeguards have been brought in. However without representation on the Board when difficult decisions have to be made who will speak up for the British end of the Airbus business? TLS will point out that Rolls-Royce is a major contributor to the product line. Airbus would argue that the UK skills and technology that go into the engines also go into the wings.
Just suppose BAE Systems gets its billions. What will it do with its money? Give it to shareholders or invest more into the US. British firms involving themselves in North America have not always found the rewards. The lines of communications are long and the work ethics different.
BAE has made the first move. Are we now on the middle game or the end game? Is it time for a strategic re-think. A lot is at stake. Don”t forget the UK led the world at one time in heavy engineering, railways, shipbuilding, even motor cars, and certainly as far as Europe was concerned in commercial aviation. All this comes at the time of the 200th anniversary of Brunel”s birth. Are we finally to bail out?
And just to prove that money can be made in the airline business without too much effort, nerves of steel and a healthy bank account, Icelandic investor group FL are a cool ”100m better off. After acquiring around 16.9% of easyJet with claims of a full take-over, last week they suddenly disposed of the asset. Mind you their broker, American investment bank JP Morgan, was none too pleased nursing a ”12m loss on share dealings.
Malcolm Ginsberg