A wrong move?

THE future of British defence giant BAE Systems is in doubt after its proposed merger with Airbus planemaker EADS collapsed yesterday. There is speculation that BAE Systems could now be in the firing line for a takeover from a U.S. defence company. BAE Systems, which is building the new aircraft carriers for the Royal Navy and is set to win the contract for the next generation of nuclear armed submarines for Britain, has been hit by lower defence spending. But in some ways it is their own fault. Lucrative defence contracts have dried up but the Civil Aviation industry is booming. Now it was BAE Systems who decided to sell its stake in Airbus to EADS six years ago to concentrate on the defence industry especially in the U.S. BAE spent the money from the sale of its Airbus stake on defence contractors in the U.S. This appears to have been a bad decision. Airbus is now a aerospace giant employing thousands of people across Europe, including thousands in Britain. BAE is still a major defence player but it has rather shown its hand; it is concerned about its future especially with major defence cuts in Britain and the U.S. BAE not only sold off its Airbus stake it also closed down its own civil aviation company which produced the highly successful BAE 146 jet airliner which is used by the Royal Flight in Britain. Probably the biggest lesson that BAE has learnt is that you don´t put all your eggs in the same basket. You don´t know what is around the corner.