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British Firm to Sell Stake in Airbus

BAE, which owns 20% of the plane maker, wants to focus on the U.S. defense market. It is in talks with the holder of the remaining 80%.

April 08, 2006|From the Associated Press

LONDON — British defense and aerospace group BAE Systems confirmed Friday that it was in discussions to sell its 20% stake in aircraft maker Airbus.

BAE is negotiating with Franco-German group European Aeronautic Defense & Space Co., which owns the remaining 80% of Airbus, about the sale. EADS recently valued BAE's stake in the aircraft maker at 3.5 billion euros ($4.3 billion).

"We believe that now is the right time for us to divest our Airbus shareholding to allow us to concentrate on our core transatlantic defense and aerospace strategy," BAE Chief Executive Mike Turner said.

BAE has long been expected to sell the Airbus holding as it focuses on building its presence in the giant U.S. defense market through acquisitions.

EADS has had an option in place that would let it take over the stake, and it has made no secret of the fact that it is eager to take full ownership of Airbus.

Michael Hauger, an EADS spokesman, said Friday that the company maintained its stance that Airbus was part of its core business.

"EADS has always wanted Airbus," said analyst Edmund Shing at Kepler Equities, though he said the price was high.

Airbus has eclipsed U.S.-based Boeing as the world's top-selling commercial aircraft manufacturer, delivering more planes than Boeing for the third straight year in 2005.

The prospect of a sale prompted calls from British unions for emergency talks with BAE about potential job losses among 13,000 workers employed in Britain by the company.

The British workers are involved in building wings for Airbus' commercial jetliners, including the new, super-jumbo A380, a 555-seat plane due to go into passenger service at the end of this year.

"We want to find out if production will remain in the U.K. or whether it will be shifted to countries where the new buyers are based," said Ian Waddle, national officer of the Amicus union.

BAE said there were no implications for jobs, and analysts said it was likely that work on the wings would continue in Britain under a subcontracting deal.

Stuttgart, Germany-based DaimlerChrysler, which holds a 30% stake in EADS, said this week that it would sell 7.5%.

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