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Aviation History
1989
1989 - 0007.PDF
Benz board votes for merger Daimler- by Stefan Geisenheyner in Wiesbaden On December 21 the board of directors of Daimler-Benz voted 11 to nine to the merge of the company with MBB. The nine votes cast against the merger belong to representatives of the Daimler workforce. From the beginning of the merger talks, the trade unions had opposed the merger, argu ing that, economically and politically, it would not be feasible to create such an indus trial combine. The outcome of the voting was not assured until the last moment because MBB's three majority shareholders, the States of Bavaria, Hamburg, and Bremen, had made their agree ment dependent on the con dition that the workforce and the location of the factories would not be altered. In a surprise move, the West German Government, which is subsidising the Airbus venture until the year 2000 with billions of Deutschemarks, set a last- minute condition that all profits from MBB's military activities would have to be used to pay off the Airbus subsidies. This condition prompted Daimler- Benz to contact United Tech nologies as a possible future partner. In view of the coming Euro pean trade liberalisation, the German Government could not agree to a major investment by Daimler-Benz in the USA, and instead sought a compromise on repayment of subsidies. It was eventually agreed that the Daimler-Benz/MBB combine would use only its gains from production of military aircraft, not missiles or space activities, to pay off the Airbus subsidies. It was emphasised, though, that this accord needs further discussion before inclusion in the contract. The demands of the state governments were not fully met by Daimler-Benz's assurances that MBB will be given enough freedom of action to conduct its business independently "according to sensible economic rules". This implies that no guarantees about the location of the facilities of the future German Aerospace Company—comprising AEG, Dornier, MBB, and MTU— British Aerospace has revealed the full structure of its new Commercial Aircraft subsidiary, formerly known as BAe Civil Aircraft Division. The new company is being organised into three separate profit-accountable divisions reflecting "the differing nature of the customers they serve". These divisions should be fully operational from February 1. The Airbus Division is about to embark on expansion and, BAe says, it will be expected to cut costs to ensure profitability. The Filton and Chester sites are part of the division, and Bob McKinlay is managing director. The Airlines Division is also under pressure to cut produc tion costs and exert tight inven- BAe cool c British Aerospace is playing down reports of its talks on possible collaboration with Fiat. There has been only one meet ing so far, the company says, with no firm plans for further talks, although the possibility is not ruled out. Discussions are understood to have concentrated on possi ble projects involving' BAVs dynamics division rather than its aircraft divisions. BAe is Europe's largest aero space company, but knows that even it will have to look to co operation to cope with immense can be given. Daimler-Benz chairman Edzard Reuter says that the board's agreement has elimi nated the last major obstacle to the merger but, since a host of minor problems have still to be discussed and solved, no firm time schedule for the actual legal merger procedures can yet be set. The next critical step towards the realisation of the proposed combine is approval by the German anti-trust authority, which is part of the legislative branch of the Government. The Daimler-Benz/MBB merger is legally not permis sible, but the law can be inter preted differently by the Government if the situation warrants it. tory control. It includes Hatfield, Prestwick, Woodford, and Chadderton, and its man aging director is Charles Masefield. The head of the third division, Corporate Aircraft, has not yet been named. It takes control of the BAe 125 finishing centre at Chester. BAe Commercial Aircraft is stressing the high degree of authority delegated to the divisions, and the final account ability of managers. BAe had previously announced that the company chairman would be Syd Gillibrand, and its managing director Dr Maurice Dixson. Dixson is also chairman of the management committee. i Fiat link development costs in the 1990s. The European Council of Ministers is due to decide soon how much money to grant Europe's nine leading aerospace manufacturers for initial work on collaborative projects identi fied in the 1988 Euromart study. BAe is also reported to be discussing joint projects with French electronics concern Thomson-CSF, and to be talk ing with West Germany's Daimler-Benz (soon to form German Aerospace) about the possibility of exchanging share holdings. FedEx moves in for Iigers by John Bailey in Los Angeles Federal Express has offered $880 million for Tiger Inter national, parent company of rival freight carrier Flying Tigers. If successful, the deal will make FedEx the world's largest air-cargo carrier, secu ring control of the worldwide route neWqrk operated by Flying Tigers. Memphis-based FedEx, which pioneered the domestic small-package express deliv ery business in the USA, plans to integrate the operations of the two carriers, but it is not yet clear whether the Flying Tigers name will disappear. FedEx says that it will operate Tigers as a separate subsidiary until details of the integration are finalised. The deal has been approved by the board of Tiger Inter national, and FedEx has posted its offer to buy outstanding stock*at $20-875 a share. Before the announce ment, Tiger stock was trading at $16-875 on the New York Stock Exchange. The takeover will have to be approved by both the US Departments of Justice and Transportation, but both parties have requested "expedited pro cessing", and the deal should be completed early next year. Federal Express has been attempting to expand its over seas network for some time, in order to survive increasingly heated competition on the domestic front from United Parcel Service. FedEx's worldwide network includes some 85 countries. Tiger International recently completed a well-publicised turnaround from its financial troubles in the early 1980s, when the company almost went bankrupt in the face of competition generated by airline deregulation. The principal subsidiary, Flying Tigers, is claimed to be the world's oldest and largest scheduled heavy-cargo air line, with a fleet of 22 Boeing 747 freighters, six McDonnell Douglas DC-8-73s, and 11 Boeing 727-100s. Although Flying Tigers has recently introduced an express freight delivery service, its market does not overlap with that of Federal Express. While FedEx is a small package carrier, Flying Tigers concen trates on loads weighing 701b or more, including livestock, heavy machinery, perishables, textiles, and electronic prod ucts. BAe restructures FLIGHT INTERNATIONAL, 7 January 1989 5
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