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Aviation History
2004
2004-09 - 1059.PDF
BUSINESS LEGISLATION STEPHEN TRIMBLE / WASHINGTON DC Storm brews in USA over offsets Showdown builds as legislators move to make Department of Defense manage industrial compensation deals with foreigners A new showdown on US defence trade policy is building in the US Congress, fuelled by a growing backlash over offset requirements. Opposition to the industrial com pensation deals often imposed on US defence companies by foreign customers has become a bipartisan issue, with US Senator Christopher Dodd, a Democrat, and Repre sentatives Duncan Hunter and Henry Hyde, both Republicans, pur suing separate strategies for reform. Dodd's proposal, filed as an PURCHASE The Base Element holding com pany, headed by aluminum magnate Oleg Deripaska, has acquired a 51 % controlling stake in Kuban Airlines, one of Russia's few profitable regional airlines. The stake was report edly bought for Rb730 million ($24.3 million). Deripaska has a number of business interests in the Kuban region, while Kuban Airlines owns the main airport in Krasnodar. PRIVATISATION Romania's Brasov-based aircraft manufacturer, IAR Ghimbav, is to be split into three separate com panies as part of its ongoing privatisation programme. Economic and finance manager Ion Dumitrescu says one com pany, which will retain the IAR Ghimbav name, will continue to build, repair and maintain heli copters. Another, to be called Aircraft Building, will offer aircraft repair and maintenance. Romanian news agency Mediafax says the three compa nies will keep the same shareholder structure as the original IAR, the ministry of economy and commerce holding 64.8% of each, the existing pre- privatisation shareholders holding the rest. lAR's 51 % stake in Eurocopter Romania will be transferred to IAR Ghimbav. amendment to the fiscal 2005 defence authorisation bill, would require the US Department of Defense (DoD) to create and man age an industrial offset policy for the first time. Under Dodd's legislation, the USA would require an offset package from an offshore company that is equivalent to the offset requirement in its home country. The full text of the legislation had not been introduced into the bill as Flight International went to press. Meanwhile, the House of ACQUISITIONS Acquisitive L-3 Communications is to buy US infrared sensor supplier Cincinatti Electronics from Canada's CMC Electronics for $172 million and electro-optical system specialist Brashear for $36 million, both in cash deals. Cincinatti Electronics has enter ed a long-term agreement to con tinue supplying infrared detectors for CMC's enhanced vision system, Representatives has overwhelm ingly passed a version of the defence authorisation bill. It includes anti- offset language introduced by Hunter, who led an unsuccessful campaign last year to raise the "Buy American" threshold on US military procurement programmes. Hunter's proposal, called "defen ce trade reciprocity", is also champi oned by Hyde, chairman of the House Foreign Relations Com mittee. The measure would punish countries that impose offsets on US under development for initial application on the Bombardier Global Express business jet. The Cincinatti, Ohio-based firm also makes the AAR-44 missile warning system as well as space electronics. Pittsburgh, Pennsylvania-based Brashear, meanwhile, makes laser ranging and tracking systems, and recently delivered the flight turret contractors, barring the DoD from buying equipment and services in countries with existing offset deals. Both strategies in the House and Senate are widely seen as spin-offs of last year's failed "Buy American" proposal, but are now set against the backdrop of a national election and a so-called "jobless recovery" of the US economy. The proposals are at odds with Bush administration trade policies and are also opposed by the Aerospace Industries Association. profit over the past two years despite the financial problems of some of its major clients such as Air Canada, Swiss, United Airlines and US Airways. Snecma registered net profits of €106 million ($130 million) in 2002 and €182 million in 2003 and this, Bechat says, is what encouraged the French govern ment to relaunch the privatisation process after it had been inter rupted in September 2002. He also cites the 8% rise in the value of EADS shares since the beginning of the year as an indica tion that investors' confidence in the aerospace sector appears to have returned. The CFM56 now accounts for about 35% of Snecma's turnover, Bechat says. ball for the US Air Force's Boeing 747-based YAL-1 Airborne Laser prototype. New York-based L-3, with 2003 sales of just over $5 billion, acquired half a dozen companies last year at a cost of more than $1 billion. Already this year the company has purchased small-arms training firm Beamhit for $40 million. CONSOLIDATION CHRISTINA MACKENZIE / PARIS Snecma head rules out Bechat: ready to broaden horizons Snecma's chief executive Jean-Paul Bechat has dismissed the idea of mergers with other European engine makers, including Rolls- Royce, following its partial privati sation on 2 June. He reveals, however, that in the military sector, Snecma and R-R are "ready to broaden their part nerships". Bechat says Snecma's principal objective is to continue develop ment of the CFM56 civil engine produced in a 50:50 relationship with General Electric. In a speech to the French parliamentary defence commission following the government's decision to release 35% of the manufacturer to the public sector, he claimed it was the group's "robust economic model" which had enabled it to turn a rule t mergers L-3's spending spree continues 24 22-28 JUNE 2004 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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