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AEROSPACE : Hughes Agrees to Sell Flight Simulator Unit : Technology: England-based operation, hurt by weakened demand, will be bought by French rival Thomson-CSF.

November 25, 1993|JAMES F. PELTZ | TIMES STAFF WRITER

Hughes Aircraft Co. said Wednesday that it has agreed to sell its aircraft and thrill-ride simulator lines to Thomson-CSF, a French defense electronics concern that is also a major player in the flight-simulation field.

The sale price was not disclosed. Hughes said it hopes to complete the sale of the struggling unit, Hughes Rediffusion Simulation, by Dec. 31.

Hughes Rediffusion is based in Crawley, England, where most of its 1,300 workers are employed. The operation includes Hughes' entertainment systems group, which has applied much of the company's simulator technology to the thrill-ride market.

The division's high-tech amusement simulators include those on Disneyland's "Star Tours" attraction and on the "McThriller" ride at a McDonald's restaurant in Buena Park.

Hughes, a Los Angeles-based unit of General Motors Corp., bought the business for $238 million in 1988, when demand for commercial and military aircraft--and thus simulators--was strong.

But demand has since plunged because of airlines' huge losses and U.S. defense budget cuts. As a result, Hughes Rediffusion has suffered along with its two main rivals, Thomson-CSF and CAE of Toronto.

Hughes does not disclose financial results for Hughes Rediffusion, but the unit's annual sales are believed to be about $200 million. Two years ago, the division revealed its problems by slashing employment 30%--a restructuring that also forced the parent company to take a $40-million charge against earnings.

This year, "if (the simulator division) made money, they didn't make a lot," said Cai von Rumohr, an analyst with the securities firm Cowen & Co. in Boston. The flight simulator market, he said, "has been horrible."

Hughes spokesman Ray Silvius said the company believes that "the prospects for any recovery do not seem bright."

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