Julian Moxon/PARIS

France appears to be softening its position against a merger between British Aerospace and DaimlerChrysler Aerospace (Dasa) ahead of a three-way alliance which includes the Aerospatiale/Matra/Dassault group.

Finance minister Dominique Strauss-Kahn has admitted to a parliamentary committee that an early BAe/Dasa merger, followed by inclusion of France's re-organised industry, "-could perhaps be simpler".

French industry sources have already admitted that the complexity of a three-way simultaneous alliance makes such a merger "extremely difficult to contemplate". Germany and the UKhave repeatedly insisted that the inclusion of France in the European entity cannot occur before Aerospatiale is fully privatised, a view which has recently been endorsed by Strauss-Kahn, who told the committee that the philosophy of state ownership of companies involved in European regrouping "-should not be privileged for the sake of protecting national sovereignty".

An early BAe/Dasa tie-up, which some reports say has run into trouble, would leave France with several options.

The country could use its key role as a 37.5% partner in the Airbus consortium effectively to block progress on forming a single company, or it could pursue the creation of a major French grouping based around the soon to be merged Aerospatiale/Matra/ Dassault, eventually bringing in the newly enlarged Thomson-CSF defence electronics and space grouping, which includes Alcatel Espace and Dassault Electronique. The latter option would produce a French company on a scale comparable to that of BAe/Dasa.

Officially, the government is pushing for the creation of two separate groupings in aeronautics and defence electronics, each of which would be available for further European consolidation. But the speed with which France has shifted its position on the privatisation of Aerospatiale indicates that further change is possible.

The ongoing negotiations come in the wake of the recent joint statement issued by Airbus partners Aerospatiale, BAe, CASA and Dasa, confirming that a unified integrated European aerospace and defence company is the "right target structure" for the entity.

Source: Flight International