AEROSPATIALE HAS BEEN told by a senior Daimler-Benz Aerospace (DASA) executive to put its house in order before attempting to merge its missile business in a joint venture with the German company.

Speaking at the show, Werner Heinzmann, DASA's defence and civil systems division president, said: "We know there is overcapacity in the French defence industry," adding that both partners should begin the joint venture under equal conditions.

In a blunt warning to Aerospatiale, Heinzmann says: "We are not prepared to carry 50% of the costs ensuing from French adjustment problems." At the very least, DASA - already burdened with substantial cutbacks of its own - "...must have an absolutely clear picture of which way restructuring must go" before the new company is established.

The European Missile Systems (EMS) joint venture was agreed at the end of 1995, and is intimately linked with a planned DASA/Aerospatiale European Satellite Industries (ESI) venture. Both could be threatened by continuing discussions in Bonn over new defence-budget cuts.

Klaus Rose, head of the German parliamentary defence committee, confirms that discussions are now under way in Bonn over cutting funds for the Helios 2/Horus reconnaissance-satellite programme. The Federal finance ministry is demanding savings in the 1996 budget of a total of DM7 billion ($4.6 billion), of which up to DM2 billion could come from the defence budget.

German participation in the satellite programme was a precondition for the French go-ahead for the German-led ESI and French-led EMS ventures.

Heinzmann, who is also president of DASA's space-systems division, says that he remains optimistic about the space venture and emphasises that the programme is vital to Germany.

"The importance of the satellite reconnaissance programme...extends far beyond the boundaries of European foreign and security policy. It is a technology programme to secure Germany's position in the [space] market...and it aims at increasing technological competitiveness and at creating high technology jobs in Germany," he says.

He welcomes the recent missiles co-operation between Matra and British Aerospace, describing it as a "...necessary measure for European integration". No plans exist in the short term to merge EMS with this partnership.

See News Analysis, P27.

Source: Flight International