International Outlook: Global Wrapup
One of Europes crown jewel companies, British Aerospace PLC, is in danger of crashing and burning. BAe is expected to announce big asset sales, $1 billion write-downs, layoffs, and a dividend cut when it releases first-half results in September. The corporate-jet division, satellite-communications subsidiary, and commuter-aircraft business could all go on the block. BAe will not comment on asset sales, but industry analysts say these businesses are now being shopped around, and getting only lukewarm responses. That, together with expected losses in the first six months, knocked the stock price to $4 a share, down from $12 a year ago. The company lost $250 million in 1991.
BAe has been hurt by a downturn in defense business, particularly the disarray in the European fighter project. The company's efforts to diversify away from defense into commercial real estate and autos, through purchase of Rover Group Holdings PLC in 1988, have been disastrous. BAe's hopes for recovery rest on defense orders from Saudi Arabia and other wealthy Third World buyers. Taiwan recently expressed interest in a 40% stake in the commercial-aircraft business.Edited by Stanley Reed