BAE boss puts out feelers for sale of aircraft business

BAE Systems has hoisted a "for sale" sign over its £300m ($796m) aircraft business, which supplies parts for the Airbus A380 super jumbo.

Dick Olver, BAE's chairman, has decided that the business based in Prestwick, Scotland, is no longer central to BAE's strategy of building military equipment, and is discreetly seeking buyers.

A company spokesman said: "It is a perfectly viable business, but it is not core to what BAE does. It is worth more to another company than it is to us."

BAE has yet to appoint investment bankers to handle the sale, but it is understood that the company has already sounded out potential buyers.

The so-called aerostructures operation employs 700 people in Scotland. As well as being a supplier to the A380, it makes components for Airbus's rival, the Boeing 7E7 "Dreamliner".

Other customers include the US aircraft maker Cessna and the US defence company Raytheon.

This is the second time BAE has attempted to offload its aerostructures business. In December 2003 it came close to selling it to the US aircraft maker Vought.

However, the deal collapsed days before Christmas after the two parties failed to agree on a price. BAE put the sale on ice as the market for civil aviation parts cooled.

But executives now believe that the recent recovery in the market means they will get a fair price.

It is understood that GKN, the British engineering company, held informal talks with BAE shortly after the deal with Vought collapsed. Well-placed sources revealed that GKN was no longer interested.

The news comes as BAE starts to reorganise its businesses. Last week the company announced plans to axe 1.400 jobs at 13 sites across the UK due to a lack of new orders.

However, the aerostructures business in Prestwick was spared any cuts. BAE is also pondering the future of its shipbuilding operation.

Encouraged by its biggest customer, the Ministry of Defence, BAE is considering merging its Clydeside yard with VT Group's Portsmouth shipyard and Babcock International's Rosyth facility.

However, there are concerns that the three companies will be unable to agree the shareholdings of the enlarged entity.

- INDEPENDENT