Kevin O'Toole/LONDON

British Aerospace is preparing to use its new link with Saab to create an enlarged asset management and in-service support operation for their combined regional aircraft fleets. BAe hopes to make it the first step in a European-wide consolidation which could eventually include links with Airbus.

BAe Asset Management (BAeAM) is already gearing up to send teams over to Sweden in the wake of the announcement that the UK group is take a 35% share in Saab. Both groups have emerged from the shake-out in the regional market with sizeable in-service fleets to support and liabilities on their own portfolio of aircraft.

BAeAM manages close to 100 146 regional jets on which BAe still holds a liability, as well as a portfolio of just under 400 turboprops, largely made up of Jetstream 31s and 41s. The unit has also begun to take responsibility for the Avro RJ family which is still in production.

Saab, which has begun winding down its turboprop production lines, directly owns more than 70 Saab 340s and another dozen 2000s, but is understood to hold long-term liabilities on around half of the in-service fleet.

"We want to develop a common strategy with our new partner," says BAeAM general manager Rory Fisher, outlining ambitions for the venture to become the base for an integrated European operation mirroring the consolidation taking place among the manufacturers. He hints that the long term strategy includes forging closer links with others such as ATR and Airbus.

The concept is also being developed further, towards what Fisher calls "global portfolio management" pulling together all aspects of product support.

The current combined fleet of BAe and Saab aircraft, most now out of production, stands at 1,400, which both manufacturers have an interest in maintaining to protect residual values.

It is understood that plans are being prepared to bring in the RJ as part of this concept following the 28 April announcement of the demise of the Aero International (Regional) marketing joint venture with ATR. When the break-up was reported, BAe pledged that their support costs would not rise.

BAe and Saab are also understood to have been in contact with Embraer, which has made clear that it would be interested in forging a partnership to provide it with an international support network for its growing regional jet fleet. BAe has officially confirmed a deal to take a stake in Saab at the end of April after heavy exposure in the media. Sweden's powerful Investor group has been under mounting pressure to offload some of its poorly performing holdings, with the Saab business among the lead candidates. The proposal is for BAe to acquire a 35% stake for SKr3.5 billion ($450 million), with Investor retaining another 36% and the remainder being floated on the Stockholm exchange some time "before the summer".

Saab president Bengt Halse says that BAe is a "natural owner" given the agreement already forged for it to market the Gripen fighter worldwide alongside its own combat aircraft portfolio. Saab also brings a missiles business, which could supplement the Matra-BAe Dynamics/LFK tie-up.

In 1997 Saab posted sales of SKr8.7 billion, with about half from military aircraft, and a loss of SKr3.8 billion after taking a heavy charge to cover the end of turboprop production.

Source: Flight International