Warning of more Airbus delays

BAE Systems has warned of further delays and cost overruns on two of Airbus's flagship programmes - the A380 super jumbo and the A400M military transporter jet - and insists it has no regrets about baling out of the European aircraft manufacturer.

Chief executive Mike Turner said that had the company held on to its 20 per cent shareholding it could have been faced with a "significant cash call" to fund its share of the Airbus programme.

He also said BAE's reputation in the United States defence market could have been compromised if Airbus won the highly politicised battle with Boeing for a US$100 billion ($152.7 billion) tanker refuelling contract from the Pentagon.

BAE has agreed to sell its Airbus stake to the majority shareholder EADS for €2.75 billion ($5.3 billion) - a surprisingly low valuation arrived at by the investment bank Rothschilds after the two sides could not agree on a price.

The valuation came after a shock profits warning from EADS over production delays on the A380 and is less than Airbus was valued at in EADS's own books.

But Turner said BAE had "no regrets" about not selling the stake earlier and insisted: "We are happy with € 2.75 billion."

- INDEPENDENT