On the Record with
Giorgio Zappa, President, Alenia Aerospazio

Alenia Effectively Merging with EADS

The name Alenia Aerospazio will disappear at the end of this year, but Italy's aerospace industry will go from strength to strength.

That's the opinion of Giorgio Zappa, president of Alenia Aerospazio, which is combining all its aerospace assets with the military and aerostructures activities of EADS to form what is loosely called the European Military Aircraft Company. The 50-50 joint venture is expected to be up and running by the end of the year.

The JV will account for the strongest share of all major European military programs, including:

• 62.5% of Eurofighter,
• 57.5% of Tornado,
• 71% of the Airbus A400M transport, and
• 100% of the new maritime patrol aircraft program.

It will also be responsible for the AMX attack aircraft, the C-27J Spartan transport, the ATR regional airliners, and the aircraft modification business of Aeronavali, including conversion of airliners into freighters.

While Alenia's parent, Finmeccanica, will become a 10% risk sharing partner in A3XX and will likely exercise its option to take a 5% share of the Airbus Integrated Company, the JV will evolve into a major aerostructures company supplying both Boeing and Airbus.

The JV will also strengthen its links with Embraer of Brazil (which is co-partner on the AMX attack aircraft) to encompass regional aircraft.

The new management structure of the JV hasn't been disclosed, but Zappa expects to play a major role. "My future will be inside the European aerospace business," he said. "I consider myself totally engaged in the new aeronautical business."

One of the first major decisions the JV must take is on a "Eurotrainer" to replace aging training aircraft in most European countries. Dasa-and now EADS-is promoting its Mako project, although that is initially targeting the sophisticated light attack market.

"But we must also consider the investment of (related company) Aermacchi in its joint program with Yak on the Yak-130," said Zappa. Aermacchi is due to announce a new advanced trainer here at Farnborough.

"The JV must decide on the trainer," said Zappa. "But it must also consider it not just as an aircraft, but a training system." Dassault, in which EADS (but not the JV) has a 49% stake could also be involved if it is folded into the JV. (Alenia already works with Dassault, producing $100 million a year worth of structures for Dassault business jets).

"It is necessary for the investment in the trainer to create the critical mass among the European air forces," he added.

Looking ahead, the JV could also find itself participating in the U.S. Joint Strike Fighter as an industrial partner if the Italian government decides in the next few months to join that program.
Alenia already has strong transatlantic ties on the aerostructures side with Boeing (it builds the fuselage for the 717 and tailsets and composite moving surfaces for the 767 and 777), and with Lockheed Martin, its partner on the C-27J.

"These transatlantic ties are one of the assets of Alenia in the JV," said Zappa. "Our customers want to maintain these relationships now we are in the JV, and our government wants us to retain them." Even while investing in the Airbus A3XX, "If Boeing offers me fuselage panels on the new 747X Stretch-I accept!," he said.

Zappa pointed out that Finmeccanica is committed to aerospace as one of its core businesses, and both it and the Italian government fully support European integration. However, Finmeccanica has recently enjoyed returns of 14% on sales from Alenia Aeronautics over the last two years and wants to keep it that way. Hence it is biding its time and waiting for a thorough evaluation of Airbus' books before it exercises its option to take a 5% share in the new company.

"We intend to become shareholders in Airbus-that is very important to us," said Zappa. "But it is also necessary to make money."

Another decision to be made by the JV is its new name. Zappa said the proposed European Military Aircraft Company "will have to go."

"Yes, we need a link with the past, but also with future globalization," he said. "Our business is not just European"-and the new name, he believes, should reflect that.

By John Morris