Airbus Merger Ok’d Proposed Deal Could Strengthen Consortium’s Ability To Compete Against Boeing

The top civilian aircraft makers of France, Spain, Germany and Britain agreed in principle Friday on a merger that would create a single European aerospace and defense company.

Such a merger of the companies that produce the civilian Airbus jetliners could create a European powerhouse that could compete with the rival U.S. aerospace giants Boeing and Lockheed Martin.

The four companies now use Airbus as a marketing arm. They said they had presented a report on the merger plans to their respective governments, which have resisted ceding control over defense production.

There was no timetable and the companies were vague about what concrete steps would be taken to pursue the merger. Progress on the merger plans also was likely to be slow given the varied corporate, legal, tax and export policies of the companies as well as differences in their governments’ defense priorities.

The plans include expanding from Airbus Industrie’s focus on producing civilian aircraft to military products. European defense companies long have said they are too weak to compete individually with the Americans.

The announcement was made in Munich, Germany, by Airbus partners: France’s Aerospatiale, Germany’s Daimler-Benz Aerospace, British Aerospace PLC and Construcciones Aeronauticas of Spain. It is the next step toward the goal of turning Airbus from a consortium into a corporation by Jan. 1, 1999.

The statement said the companies had agreed on goals, size and operating structure, but that no date had been fixed as to a merger date, as had been requested by their governments in December.

A merger could be expanded to include other European defense firms, including Saab AB in Sweden, Finmeccanica in Italy and Dassault Aviation and Lagardere’s Matra unit in France.

The proposed merger between Lockheed Martin Co. and Northrop Gumman and last year’s merger between Boeing Co. and McDonnell Douglas Corp. has spurred the Europeans in their sluggish efforts to unite.

“That is the motivation for it. It is to enable us to compete on an equal footing with the American giants,” said Charlie Miller, a spokesman for British Aerospace.

The combined European company is supposed to include operations in civil aviation, military transport planes, satellite, helicopters, missiles and eventually fighter planes.