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Wednesday, October 27, 1999 Published at 11:14 GMT 12:14 UK

Business: The Company File

BAe plans Italian link

The alliance would allow BAe to control the Eurofighter project

British Aerospace says it may form an alliance with the military aircraft subsidiary of Italy's Finmeccanica.

The move would give BAe control of the Eurofighter project and a clear dominance of the European manufacture of combat aircraft.

Any alliance would be seen as a response to the merger agreement between Aerospatiale Matra of France and DaimlerChrysler Aerospace (Dasa) of France. It is to buy Spain's Casa.

The newly merged company is to be known as the European Aeronautic, Space and Defence Company (EADS).

EADS will have 43% of the Eurofighter consortium.

BAe has a 37.5% stake in Eurofighter while Alenia Aerospazio, the Finmeccanica subsidiary, has a 19.5% stake.

EADS may also try to ally itself with Alenia.

"There will be a competition with France and Germany to bring Alenia in to a joint venture," BAe's executive director Mike Turner said.

"Clearly we would like them in the BAe camp. They are a very important player, particularly in the defence sector," Mr Turner said.

Turbulence in aerospace

News of the merger between the French and German aerospace companies posed a questionmark over BAe's future.

As EADS is predominantly a civil aerospace firm, BAe wants to cement its position in defence aerospace.

The merger has meant that EADS now owns 80% of Airbus, the civil aerospace consortium, with half of its revenue generated by Airbus.

European governments want the plane-making consortium to become a lean, privatised, fully-fledged company before it receives any more subsidies. This may result in EADS becoming a much smaller company.

BAe last week finalised agreement with Finmeccanica on electronics and missiles joint ventures.

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