The A380 programme is likely to suffer further delays, according to Mike Turner, chairman of exiting shareholder BAE Systems.
“I’d be surprised if there weren’t further delays,” Turner told journalists at a presentation of the company’s interim results for the first half of 2006. He expects new Airbus head Christian Streiff to “come to a view on where the programme really stands” around October, he adds.
Turner insists that he has “no regrets” about the process that led to a decision to recommend selling its 20% Airbus stake to shareholders. “We’re happy with the number and happy to recommend [approval of the sale] to our shareholders. It’s the right thing for our company to do and allows us to invest our resources, which are now considerable in defence.” BAE is set to walk away with €2.75 billion ($3.5 billion), a much lower figure than it had initially expected to generate from the sale.
Shareholders are expected to approve the sale of its stake at a meeting on 4 October. Turner says he does not expect to encounter problems in persuading them to approve the deal – “no one has said stay in – we will not have a difficult time at the EGM.”
But the company is not dependent on the sale of the Airbus stake to continue investment in defence, Turner adds. The USA is a key target: “I would not be surprised if in due course we made further acquisitions in the USA.” BAE has “several billion pounds” of acquisition firepower available, if needed, says chief financial officer George Rose, and future purchases could be funded by a mixture of equity and debt.
Turner warned that shareholders in Airbus could face a “considerable cash call” in the future because of challenges to the manufacturer including the resurgence of Boeing, the weakness of the dollar, and the number of new programmes Airbus is working on.
The company is still considering legal action against Airbus co-owner EADS over the way in which the extra delays and associated costs came to light. “The 13 June announcement [that there would be further delays to the programme] was a surprise. What we’d like to know is if EADS had [an inkling] - they say they didn’t.”
BAE turned in sales of £8.2 billion for the period, compared with £6.8 billion ($12.9 billion) for the first half of 2005. Operating profit was up from £488 million to £653 million.