Lockheed-Airbus Merger Seen Unlikely
Speculation that European aircraft consortium Airbus Industries is in merger talks with Lockheed Martin Corp. was expected to be treated skeptically when stock markets open today, analysts and industry sources said Sunday.
A report in the London Times Saturday said that Airbus and the U.S. defense and aerospace giant were in merger talks, with a view to combining after 1999, when the four-member Airbus cooperative is due to become a single company.
“I certainly won’t be coming into the office early on Monday to deal with this one,” said one investment analyst, who declined to be named.
Analysts said it would be no surprise if Lockheed joined Airbus partners on individual projects, such as the Airbus A3XX superjumbo jet, but Lockheed would dwarf the European company in a merger, with sales last year of $27 billion against $8.8 billion at Airbus.
Yves Michot, chairman of French Airbus partner Aerospatiale, said in January that he was in talks with Lockheed about the A3XX and also about possible collaboration on building a military in-flight refueling version of Airbus aircraft.
Individual Airbus partners already collaborate with Lockheed on individual projects.
“Everybody is talking to everybody at the moment, but it would be wrong to give any more emphasis to any particular talks than any other,” a spokesman for Airbus partner British Aerospace said.
British Aerospace is bidding with Lockheed on a U.S.-British project to develop a new battlefield reconnaissance vehicle and is also due to decide shortly whether it will join Lockheed’s bid for the Pentagon’s $170-billion multi-role Joint Services Fighter project.
But Boeing and McDonnell Douglas are also collaborators with British Aerospace on several existing military aircraft programs.
Sash Tusa, industry investment analyst with UBS, said it would be suicide for members of the industry not to talk to each other, because it’s an industry in a massive phase of both consolidation and uncertainty.
But the prospect of Airbus effectively being taken over by Lockheed was hard to imagine, bearing in mind the important issue of national pride, analysts said.
France’s resistance to losing control of its national aerospace and defense industry was already proving a big drag on the European industry’s attempts to consolidate in an attempt to match the might of the U.S. industry giants Lockheed, Raytheon Co. and Boeing with McDonnell Douglas.
The Airbus partners, Aerospatiale, British Aerospace, Daimler-Benz Aerospace and Construcciones Aeronauticas of Spain, agreed last year to turn Airbus into an integrated company by 1999.
But the partners are struggling to agree which national assets should be dissolved into the single corporate entity.
“The Airbus partners are not capable of getting their act together at the moment even to merge within countries within Europe which have long trading relationships, deep political relationships and are supposed to be the best of friends,” said an investment analyst.
