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EUROPE

16 Oct 06. European governments should avoid giving further state aid to troubled aerospace group and Airbus parent EADS, a German newspaper on Monday quoted a leading U.S. trade official as saying. “That means throwing good money after bad,” the Handelsblatt business daily quoted U.S. Under Secretary of Commerce for International Trade Franklin Lavin as telling the paper under the headline: “U.S. government warns against EADS state aid.” Earlier on Monday, the German government said it wanted to clarify rapidly how it would safeguard the delicate Franco-German balance within EADS. Core EADS shareholder DaimlerChrysler, which is in the process of reducing its stake from around 30 percent to 22.5 percent, has signaled its intention to sell a further 7.5 percent stake. Germany is worried that sale could upset the shareholding balance that has existed with France since the company was formed in 2000 following a merger of the two countries’ top aerospace firms. Germany fears that its influence within EADS, Europe’s largest aerospace and defense firm, could diminish if Daimler shares were bought by non-German investors. It has signaled a readiness to buy the stake itself through state development bank KfW, possibly in combination with several German states. The United States and the European Union have been involved in a row between Airbus and Boeing over state subsidies. (Source: Reuters)

16 Oct 06. U.K. ‘Just Days Away’ From Chinook Deal With Boeing. British defense officials are within reach of a pact with rotorcraft-builder Boeing, which will go part way to resolving some of the shortfall in rotorcraft availability now causing the Labour government increasing embarrassment. A negotiating team from Boeing, the U.S. aerospace giant, was in the United Kingdom last week for what Defence Procurement Agency Chief Executive Peter Spencer hoped was “convergence on the final contract” to rebuild eight Chinook Mk3 helicopters grounded almost since their delivery in 2002.Boeing officials see a deal “just days away,” Chinook program director Jack Dougherty said Oct. 10 at the Association of the U.S. Army convention in Washington. A Ministry of Defense (MoD) spokesman said Oct. 13 that discussions were ongoing. Meanwhile, Danish newspapers reported that AgustaWestland EH101 Merlins destined for delivery to the Nordic nation could be diverted to the British for rapid deployment to Iraq or Afghanistan.
The shortfalls were recently brought into sharp focus by public demands for more helicopters by British troop commanders recently engaged in heavy fighting in southern Afghanistan. The domestic clamor for more helicopters and armored vehicles for troops forced Prime Minister Tony Blair to commit publicly to sending the forces whatever they needed to fight insurgents. That policy still needs to pass muster at the Treasury. “We have a very active program at the moment which is looking to address our helicopter capability,” procurement minister Lord Drayson said Oct. 9, answering questions in the House of Lords. “It includes the use of commercial assets, but also looks at areas such as crews, spares and airframes to ensure that our requirements are met in going forward in theatre. We are doing absolutely everything we can to improve the position relating to helicopter assets.”Reputations on the Line
Agreement on the Chinook Mk3 contract would help the MoD demonstrate it is making progress on helicopters, and remove a huge stain on the procurement process. Spencer told Parliament’s Defence Select Committee during Oct. 10 hearings that he and Drayson were taking a close interest in the program. “Boeing’s reputation is at stake here,” he said. That prompted one committee member to remind the procurement chief that Boeing’s wasn’t the only reputation on the line. The Chinooks were ordered in 1995 for special forces use. Deliveries were completed in 2002. Seven of the eight heavy-lift helicopters now lie at an MoD airfield, having been c

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