Andrzej Jeziorski/MUNICH

BMW ROLLS-ROYCE and Daimler-Benz Aerospace (DASA) subsidiary MTU are in advanced negotiations over a possible merger of their aero-engine production capacities.

Rumours have been circulating in the aero-engine business for several weeks that Daimler-Benz chairman Jurgen Schrempp and BMW boss Bernd Pischetsrieder have already shaken hands on the deal, and an announcement could be made in June.

Neither company is willing to confirm the status of negotiations, although BMW R-R says that " between the only two German engine manufacturers would be to their mutual advantage".

Talks reportedly focus on an equal partnership in future co-operation, however, say well-placed sources.

Pischetsrieder restated in mid-May that the two companies should work together, primarily because of the large investments necessary in the engine manufacturing field.

A merger of the two companies has long been expected, but negotiations have been stormy - hampered partly by the industrial rivalry between BMW, which has a 50.5% stake in BMW R-R, and DASA parent Daimler-Benz.

Talks broke down in 1994 over the issue of who would lead the merger. In the middle of 1994 Schrempp issued a public statement saying that his German rival should either tie up a deal or drop political manoeuverings to link the two companies (Flight International, 29 June - 4 July, 1994).

A decision in 1994 between MTU and US engine maker Pratt & Whitney not to go ahead with a share-swap revived speculation over MTU's long-term plans.

Any deal between the two manufacturers would be likely to sound the death knell for MTU's plans to produce a mid-thrust family engine (MTFE) with P&W. This programme for a 65-105kN (15,000-24,000lb) class engine was announced in 1994 as the successor to the ill-fated "Project Blue" partnership with General Electric and Snecma.

The MTFE would be a rival to BMW R-R's BR.700 family of engines, and MTU is a 49% partner in the programme. The BR700 family has already won DM1.6 billion in orders.

P&W says "We are aware of all the speculation, but we are going to develop the MTFE, and we'd love MTU to be a part of that, but we will go forward with that plan one way or another." MTU is also co-operating with P&W on a range of programmes.

Source: Flight International