Slated to supposedly result in the biggest non-American
aerospace firm, is the BAE – EADS merger be freshly still born due to
insurmountable regulatory hurdles and declining defense markets?
By: Ringo Bones
Even though concerned parties may have until Wednesday,
October 10, 2012 to decide to give the green light of the proposed merger of
BAE – EADS, regulatory hurdles permitting. And at the proverbial “11th
Hour” of the proposed merger, there is still no agreement between the
governments of France, Germany and the UK despite Number 10 Downing Street
stating that state ownership of the resulting aerospace firm should be limited.
Given the seemingly insurmountable regulatory hurdles, politics and the “declining
defense markets”, will the BAE – EADS merger, if it goes through, result in an
economically viable merger?
INVESCO – the main underwriter of the merger was never shy
in recently stating that there’s no strategic logic in the proposed merger. And
to “seasoned observers” in the post Cold War development of the global
aerospace / defense industry – a.k.a. the proverbial
“Military-Industrial-Complex”, the oft quoted buzzword of the “declining
defense markets” seems to be a euphemism for Al Qaeda and the Afghan Taliban
not having a preexisting aerospace industry in which the remaining superpower
has to destroy as the world’s aerospace and defense industries’ makes a really
handsome profit. So if the merger goes through, how will it ever make a profit?
In our post-9/11 world where America and her NATO allies are
currently busily involved in the “War on Terror”, the only pieces of military
hardware oft used in this on-going conflict are large propeller driven military
troop carriers and long-haul subsonic high capacity long jumbo-jet like cargo
planes. Not to mention the odd unmanned aerial drone or two. The truth is, the
post-9/11 War on Terror is not just as profitable to established global
aerospace and defense firms as the saber-rattling between the US and USSR
during the height of the Cold War.
Declining defense markets and too much politically vested interests indeed ruined this proposed merger. Even as far as the 2010 Farmbrough Air Show, Louis Gallois - chief executive of EADS - plans to sell the Airbus A400M Military Transport to the American defense market because the European funders can't afford the plane anymore.
ReplyDeleteYes, the issue of declining defense markets were already noticeable back in the 2010 Farnborough International Air Show where EADS CEO Louis Gallois had a hard time selling the Airbus A400M Military Transport to the very European countries who backed the advanced troop transport plane's development in the first place.
ReplyDelete