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BAE reveals 'Airbus UK' proposal

BAE Systems is to establish its 20% holding in Airbus Industrie as "Airbus UK" in a move it says is aimed at facilitating the creation of the planned Airbus Integrated Company (AIC) in co-operation with 80% shareholder European Aeronautic Defense and Space (EADS).

The three EADS companies - Aerospatiale Matra, DaimlerChrysler Aerospace and CASA - are thought to be taking similar steps, although the BAE move will prompt renewed speculation about the future of its Airbus stake.

Recent industry speculation has focused on a possible merger between BAE and US giant Boeing - played down by the two - which would lead to an obvious conflict of interest in airliner manufacture. However, BAE chief operating officer Mike Turner says the new move has no relevance to future mergers, theoretical or otherwise.

BAE chief executive John Weston says the company is merely "building a legal boundary around Airbus", while Turner says the move is "something we have to do to create the AIC". He adds: "It's a bit 'chicken and egg' as to which is first, but we expect to do it in a few weeks." Turner says Airbus UK will be "just a legal entity", and that AIC will be "a joint venture between EADS and BAE Systems".

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