Airbus to merge with BAE

TWO of Bristol's most important employers have announced they could join forces to create the world's biggest and most powerful aircraft and defence company.

In a dramatic development last night BAE Systems and EADS, the parent company of Airbus, announced that they were in advanced talks over a multi-billion-pound merger.

Between them the two firms employ an estimated 5,000 engineers, designers and other staff in Filton and elsewhere in the Bristol area.

A BAE spokeswoman said it was too early to confirm whether there would be any job losses as a result of the planned merger, but stressed there was very little overlap between the two businesses, both in Bristol and the UK as a whole. However unions have raised concerns about the threat of possible job losses.

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Airbus employs around 4,000 people at its sprawling site in Filton which has become a centre for design and research for its commercial aircraft business, in particular wings, landing gear, fuel systems and composite technology.

The roots of defence manufacturer BAE Systems can be traced back to the Bristol Aeroplane Company, the first commercial aircraft builder in the world formed by Sir George White in 1910.

Much of BAE's work has been transferred out of Bristol but the company still employs around 700 staff in and around the city, mainly involved in cutting-edge military research and development.

Although BAE is still the world's leading defence company it has been through some tough times in recent years due to governments across the world slashing defence budgets.

Ironically, BAE was instrumental in the creation of Airbus, which included its civilian aircraft manufacturing business, but decided to sell its 25 per cent share of the company in 2006 after years of negotiations.

Since then Airbus, which is owned by the French, German and Spanish governments, has become the world's biggest commercial aircraft manufacturer.

Last night's announcement saw an 11 per cent rise in the value of BAE's shares.

Although both companies have said it is too early to say if the merger will result in job losses, Keith Hazlewood, national officer of the GMB union, said: "This is a worrying development as so much of our high-end engineering and manufacturing skills are embodied in this company."

BAE said the merger would create a business with combined sales of £60 billion and around 220,000 staff, including 48,000 in the UK alone.

The proposed deal would see BAE shareholders own 40 per cent of the combined group and EADS shareholders own 60 per cent.

A spokesman for BAE said: "The potential combination would create a world-class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA."

Under City takeover rules, both firms have until 5pm on October 10 to announce a deal or walk away.

A Government spokesman said ministers would seek to protect the UK's national interest but would not comment further at this stage.