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14 Jun 05. Ronald Sugar, chief executive of Northrop Grumman, the US defence giant, said his decision on whether to compete in the US air force’s troubled refuelling tanker programme had been affected by congressional efforts to punish Airbus parent EADS, his likely partner. The stance, taken just weeks after the House of Representatives moved to bar EADS from Pentagon programmes because of its dispute with the US over commercial aircraft subsidies, indicates that Northrop will not announce it will join the Airbus bid during the Paris Air Show this week, as many in the industry had anticipated. With the congressional dispute likely to continue through the summer, a Northrop decision could be delayed for months. According to industry officials, Northrop has been in advanced talks with EADS to take the lead on the Franco-German group’s efforts to sell A330s to the US air force when the Pentagon announces a competition for the programme later this year. But Mr Sugar said in an interview with the Financial Times that the House legislation had effected the timing of his decision.

16 Jun 05. Barely five years ago, Finmeccanica was still a hodgepodge of industrial activities. But after spending nearly €2bn to acquire ownership of the AgustaWestland helicopter business and BAE Systems’ avionics activities, it is claiming a seat in the defence industry’s top table. So it is hardly surprising that the Italian company is commanding such attention at this week’s Paris Air Show. Pier Francesco Guarguaglini, the group’s veteran boss, has been bombarded with questions over his plans. Any further consolidation of the European defence industry is bound to involve the Italians, now the second biggest defence group in the UK and actively expanding in the US. In the meantime, his priority is to complete the integration of the UK activities. Integration is more advanced in the helicopter business, boosted by its recent US success. He is now hoping to secure a similar boost for avionics by lobbying governments to transform the European Fighter Aircraft into a multi-role aircraft, enabling greater product integration. To complete Finmeccanica’s own transformation, the Italian government could well consider setting the company loose by selling its remaining 34 per cent stake. (Source: FT)

16 Jun 05. It is not only Franco-German EADS and US rival Boeing that are wrestling with succession problems and top management turmoil. Turbulence is also shaking up the BAE Systems boardroom. For all BAE’s efforts to play down suggestions of a clash between Mike Turner, chief executive, and Dick Olver, chairman, the two seem at odds over strategy. Mr Turner wants to continue expanding across the Atlantic to take advantage of the far more lucrative American defence market where BAE is already a big Pentagon supplier. In contrast to the chairman, he is not interested in further European consolidation. There is even talk of BAE shedding its 20 per cent stake in Airbus as well as its share in the European MBDA missiles group. The company denied all at this week’s Paris Air Show. Yet Airbus insiders believe the trigger for a possible BAE withdrawal could come sooner than later. Since the beginning, the UK company has built the wings for all Airbus airliners, including the new A380 super jumbo’s giant wings now being assembled at its Broughton facility in Wales. The problem is that German and Spanish Airbus partners are campaigning to secure the wing business for the new A350 due to be launched later this year. They argue they already have the expertise BAE does not to build all-composite wings to rival Boeing’s 787 Dreamliner. Should the British lose their traditional hold on wing assembly, it would provide Mr Turner with a perfect argument to pull out of Airbus. (Source: FT)Comment: Given the turmoil at EADS and the lack of defence orders in Europe, Mike Turner’s view looks sound and could lead to the wholesale pullout from the UK with the loss-making shipyards

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