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Aviation History
2002
2002 - 1049.PDF
BUSINESS OWNERSHIP TOM GILL / LONDON UK big two welcome easing of foreign ownership restrictions BAE Systems and Rolls-Royce expect US investment following change to regulations gate foreign holdings for the two companies. The change, which fol lows two rises in the ownership ceiling from 15% since 1989, was accompanied by an easing of rules requiring all executive directors to be British. Now only a majority, including chairman and chief exec utive, must have British nationality. The UK government has agreed to relax foreign ownership limits on BAE Systems and Rolls-Royce, paving the way for the two compa nies to gain greater access to capital from hungry US investors. UK secretary of state for trade and industry Patricia Hewitt has removed the 49.5% limit on aggre- RESIGNATION Turner replaces Weston at BAE John Weston, chief executive of BAE Systems, resigned unexpectedly last week after 30 years at the UK company. He was immediately replaced by chief operating officer Michael Turner. Despite a 4% dip in share price following the news, the move is not seen as reflecting badly upon Weston's performance and is not expected to herald any change in strategy. Weston, who left for "fresh challenges", did a "good job", says Harry Breach, a London-based analyst at Bank of America, and was right to diver sify the company's markets away from the UK and Middle East and to build a presence in the USA/. Turner, who competed with Weston for the chief executive post, is an "old hand" and was kept well informed under Weston's collective leadership style, analysts agree. "Day to day, Weston's departure doesn't leave a vacuum," says Nick Cunningham at investment bank Schroder Salomon Smith Barney. "The government's agreement to relax these restrictions is most wel come and reflects the development of the company into a more global business," says BAE chairman Sir Richard Evans. BAE's foreign ownership amoun ted to 48.89% on 25 March, while at Rolls-Royce it stood at 44.6% on 26 March. Both have complained that frequent breaches of this limit have dampened demand for shares from US investors. Rolls-Royce points out that its share price - which since 11 September has often languished below the £1.70 at which it was privatised in 1987 - has suffered from these limits. After news of the government move, the company's shares closed up 5% at £1.88. Ownership rules would still block a foreign takeover of these UK companies since Hewitt has maintained the 15% ceiling on any single foreign holding and the gov ernment has a "golden share". • Boeing is to sell its ordnance business to munitions specialist ATK (Alliant Techsystems). The Mesa, Arizona-based unit, with sales last year of $40 million, manufactures cannon for the AH-64 attack helicopter and Bradley fighting vehicle and will produce the gun for the F-35 Joint Strike Fighter. Terms of the cash transaction, expected to close by mid-year, have not been disclosed. • International com munications satellite operator Intelsat is to acquire Lockheed Martin's World Systems and Comsat Digital Teleport busi nesses. Terms have not been disclosed. Both units were part of Comsat, acquired by Lockheed Martin Global Telecommunications in 2000 and put up for sale when the company decided in December to exit the telecommunications services business. • Rockwell Collins has acquired signals- intelligence specialist Communication Solutions for $23 million. The privately owned Maryland-based company, which had sales last year of $16 million, will become part of Collins' Government Systems business, which produces defence communications and electronic warfare equipment. RESTRUCTURING KLM brings together its low-cost operations KLM is to bring its no-frills opera tions under a single management and its wholly-owned regional feeder operations together, in a move designed to deliver substan tial savings from fleet commonality and revenue gains from more effec tive marketing and management. KLM uk chief executive Floris van Pallandt will head a division combining the London Stansted- based airline's two-year-old no-frills division Buzz, and the Basiq Air low-price brand of Dutch charter airline Transavia. Buzz will retain its operational and licensing links to KLM uk despite the manage ment reshuffle. Transavia will remain focused on European and north African leisure destinations, while KLM may replace the Basiq Air brand with the Buzz name. Van Pallandt will also address Buzz's long term fleet plans. The airline operates eight ex-KLM uk BAe 146-300s and two Boeing 737- 300s, but is expected to move to a single type in the 150-seat-plus category - probably the 737. Elfrike van Galen, KLM Cityhopper's chief executive, will now become chief executive of a new unit combining KLM uk and KLM Cityhopper. He hopes to find savings from combining the main tenance, handling and purchasing of the two regional airlines' Fokker fleets (Flight International, 26 February-4 March). KLM's restructuring follows fel low European carrier Scandinavian Airlines' (SAS) decision to relaunch its Scandinavian operations with a single level of service. The main "perk" for business passengers will now be ticket flexi- The Buzz name may replace the Basiq Air brand bility, SAS says. SAS plans to attract business passengers by cutting prices by 30% for tickets booked at least seven days in advance - although prices for the most flexi ble tickets could increase. SAS hopes to recover yields while achieving savings by simplifying the onboard service, but denies it is trying to become a low-cost carrier. Business traffic fell 13% in February. Losses, which reached Skrl.79 billion ($169 million) before sale of aircraft and buildings last year, are expected to continue throughout most of this year. www.fliqhtinternational.com FLIGHT INTERNATIONAL 2-8 APRIL 2002 25
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