Kevin O'Toole/LONDONJulian Moxon/PARIS

ITALIAN STATE-OWNED industrial giant Finmeccanica has begun the process of separating its key aerospace and defence activities into a separate business, in preparation for privatisation, expected in 1997.

The group, which now has control of around 90% of Italy's aerospace industry, has been busy for more than the past two years untangling its various holdings into a more coherent structure, with the aim of forming a core defence and aerospace business.

After the collapse of the rival Efim state holding-company three years ago, Finmeccanica inherited its aerospace and defence interests, headed by Agusta. These have now been fully absorbed within the group, alongside the main Alenia business, says Finmeccanica.

Finmeccanica says that the next step is to separate the aerospace and defence activities from its interests in energy, transport and automotive, such as the Breda railway-equipment manufacturing operation. The group says that non- strat- egic units would be sold or closed.

"Our evolution should allow for the total separation of the defence and aerospace activities from civilian activities," says Finmeccanica's majority owner, the IRI group. It is not clear whether the non-aerospace businesses would be sold separately or as a package with the other activities.

The privatisation programme has been on hold for much of the past year since the collapse of the previous Government, but, with recent general elections now out of the way, the incoming administration is expected to revisit the issue.

Finmeccanica showed a net profit for the group of nearly L41 billion ($31 million) in 1995, down from L52 billion the year before, while revenues rose by around 6%, to reach L12.8 trillion. The group says that exports accounted for 59% of sales. Debt also rose by close to L500 billion, to end the year at L4.88 trillion, which Finmeccanica says is caused mainly by the cost of absorbing Efim companies.

Source: Flight International