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from Global Investing:

Emerging markets to fuel airline spending trajectory

Emerging markets may not have all the technological know-how in civil aerospace, but from China across the world to Brazil, they do have the cash.

The civil aerospace sector performed well in 2013, according to Societe Generale data, trading at a 4 percent premium over the MSCI world index, while the defence sector has steadied, and in the medium to long term civil aerospace should be supported by strong orderbooks from emerging economies.

Research from PwC shows the global aviation industry is set to increase by 3.3 percent to 68 billion by 2022, driven by an increase in fleet size.

Last month China decided to ease a boycott of $11 billion in Airbus jet orders. A letter seen by Reuters gives a breakdown of the A330 orders, the details of which have been mostly kept secret awaiting final approval from the Chinese government.

from Breakingviews:

BAE needs a new chairman

By Chris Hughes

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

BAE Systems needs a new chairman. Dick Olver’s management of the attempt to merge the UK defence group with EADS was poor. He has also presided over a sustained period of share-price underperformance. After eight years on the board, he should make room for fresh talent.

from Breakingviews:

France’s silly stake obsession could kill BAE-EADS

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

When EADS and BAE went to the French government with their merger project back in July, they were greeted “as if by a Parisian waiter smoking on the pavement, who makes sure patrons understand they’re not welcomed”, says one investment banker involved in the talks. Not that Paris was opposed to the deal. But it made for an unexpectedly important decision to take at a time when the new socialist government’s energy was focused elsewhere.

from Breakingviews:

Franco-German politics first hurdle for BAE/EADS

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

France and Germany must clear the air before the merger between BAE and EADS can proceed. Their uneasy alliance over the Airbus maker’s shareholding and governance cannot continue as is - its end is even a prerequisite for the merger. But Paris and Berlin remain obsessed by “parity”, the sacrosanct notion that their position in the company should be identical. Franco-German parity could be preserved in a larger group, as long as political passions are kept under control.

from Breakingviews:

Key ingredient missing for M&A revival

By Christopher Hughes
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Cheap money. Tick. Stable equity markets. Tick. Revenue pressure. Tick. Ideal conditions for a boom in mergers and acquisitions, surely? Spirits seem to be stirring in Europe, of all places, with BAE’s attempted union with defence peer EADS and Glencore’s heated pursuit of fellow miner Xstrata, while August generated a handful of multi-billion dollar U.S. deals. But not all the ingredients are in place to cook up a deal feast.

from Breakingviews:

Old dogs of war get mega M&A deal

By Hugo Dixon and Quentin Webb
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The old dogs of war have secured one of the biggest M&A mandates of the year. Bankers often say they are in the relationship business. With the proposed $45 billion tie-up between EADS and BAE Systems, this sales patter is actually true.

from Summit Notebook:

Divorced defense giants reunited in Reuters office

It might well have been the business divorce of the year, but it seems there are no hard feelings between the heads of defense contractors Northrop Grumman and jilted European partner EADS. AERO-ARMS-SUMMIT/

The companies had been bidding together to challenge Boeing for a deal worth up to $50 billion to supply aerial tankers to the Air Force. But Northrop pulled out in March leaving EADS, the Franco-German parent company of Airbus, to bid alone.

from Summit Notebook:

EADS chief longs for airplane that is no longer

What would you guess is the airplane that the head of  the company that produces the Airbus longs for?

Think fast and past.

"Concorde," Louis Gallois, EADS Chairman and CEO, says without hesitation. "It's a dream."

from Tales from the Trail:

Washington Extra – Tragedy in Alaska

ted_stevensThere were three big stories competing for our attention in Washington today. The first was the tragic death of former Senator Ted Stevens in a small plane crash in his home state of Alaska. Stevens, the longest serving Republican senator ever, was on a fishing trip with Sean O’Keefe, the North American chief of European aerospace giant and Airbus maker EADS, who was among the survivors.

Dominating eyeballs in the financial markets was the Federal Reserve’s surprise decision to move back in the direction of what it calls “quantitative easing.” The Fed will use cash from maturing mortgage bonds it holds to buy more government debt. So for now, there is no more talk of an “exit strategy” from the extraordinary monetary stimulus the central bank delivered during the financial crisis. It is a significant policy shift for the Fed, and a sign it does not view the recent slowing in the economy as simply a soft patch.

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