Chief executive warns that continued failure to consolidate is damaging programmes

MBDA is renewing calls for further consolidation among Europe's missiles players, warning that the continued failure to move ahead is damaging current programmes.

Its concerns centre on the prolonged efforts to find a satisfactory way of merging Germany's BGT and LFK, and on its desire for closer control of the propulsion and seeker elements of the Meteor air-to-air programme.

Company executives say no resolution of the German situation is in sight, even though such an agreement has been envisaged ever since MBDA's creation.

Noting that BGT has revenues of €200 million ($232 million) and LFK has €200 million-€300 million, MBDA chief executive Marwan Lahoud says: "The German government's interest is to see the market consolidate today because with the €500 million of revenues, those companies are not strong enough."

The EADS stake in both companies has made negotiations tortuous with the other MBDA partners - BAE Systems and Finmeccanica.

Lahoud says: "Everybody acknowledges we should consolidate the businesses, but there is no agreement on values. More than anywhere else the devil is in the details." He warns there are "ongoing collaborative programmes that are being endangered by the delay, for example MEADS [the joint US/German/Italian surface-to-air missile system]. As long as MBDA is not consolidated with LFK then Lockheed Martin is ruling. They are in a very good position.

"On [the fibre-optic guided] Polyphem, if we were one company then I can tell you that company would be more consolidated and the programme is endangered because we are not consolidated." There are also concerns over Meteor, for which MBDA relies on Bayern-Chemie for propulsion and has a close agreement with Thales for the seeker.

MBDA chief operating officer Guy Griffiths says: "Our view would be that when you look at changing the overall system requirements there are going to be trade-offs on both the seeker and ramjet.

"If we have within our own hands the trade-off, then it gives us far more flexibility. If we are dealing at arm's length then it is much harder. I hope that within the duration of the programme we will be able to secure that."

He adds: "The way to achieve vertical integration is not only through equity. You can achieve it through structural partnerships - long-term partnership contracts with special integration of teams - the Thales agreement, for example, where we have a long-term agreement, but we did not integrate the divisions."

Source: Flight International