Interview with

GIORGIO ZAPPA, PRESIDENT
OF ALENIA AEROSPAZIO

1) The BIG question: can you confirm you are talking to both EADS and BAE Systems about Alenia joining one camp or the other?

We are speaking since a long time with all the main players. Discussions contemplate a range of possibilities from a business-to-business approach to strategic alliances, always maintaining our unity and our high technological capabilities.

Recently Finmeccanica, the Alenia Aerospazio's holding, decided to create a dedicated company for space activities, Alenia Spazio SpA. In this framework Finmeccanica is in talks with the companies that are establishing the new European space company, Astrium.

Presently, BAE Systems and EADS are the two new giants in Europe. In this framework Alenia Aerospazio is the last large independent player in Europe's rapidly consolidating aerospace sector. Our target is to increase the value of the business, both in financial and industrial terms.

Finmeccanica is in the process of privatization and in the next months the State is expected to reduce its stake to 30%.

2) What are the pros and cons of joining either?

The goal is to maximize benefits to the shareholders through creation of shareholder value. At the same time, any agreement has to be on equal bases, while maintaining our products and our systems technologies in the future.

To reach that objective, the products lines and the know-how of the parties involved must be complementary. In fact, the agreement has to determine a proper allocation of missions and activities among the different industrial locations, so that balanced work and a qualified technology base are assured for the main industrial facilities involved in the cooperation.

3) Can Alenia remain independent and become stronger through partnerships with both? Is this a possibility?

Theoretically, Alenia Aerospazio could remain independent for the time being. Nevertheless, partnerships are part of the Alenia's strategic vision and give excellent value to the shareholder. Certainly we don't think that "small is beautiful". To exploit the best of possible synergies and rationalization of capabilities, the full partnership should be unique and essentially equal.

4) Please explain why Alenia is determined to strengthen its ties to Asian aerospace.

For many years Alenia has been promoting its products in the Far East in an unstructured approach, with the sale of G222 aircraft to Thailand. The knowledge gained so far has persuaded Alenia of two things: that we have to be a more permanent actor in the region if we want to be known and accepted as an established potential partner; and that the region offers many interesting possibilities to gain from technical capabilities that have grown in recent years. We have therefore initiated a program to identify possible industrial partners, and in parallel to better our market exposure.

(After the show) the ATR 42 MP will be also shown to some potential clients in the region, among them India -- where interest has been shown by the Navy, Malaysia and Abu Dhabi.

5) Is there a market in Asia for Alenia Aerospazio's latest products?

The new C-27J airlifter has good market capabilities in the Far East. Presently, the C-27J is subject to a final purchase decision by Greece, and is under evaluation in Malaysia and Switzerland.

The sale of eight of the latest version of the AMX, the AMX ATA, in Venezuela for advanced trainer and tactical support roles has opened new market possibilities. Also in the Far East there is an estimated market of around 800 aircraft, both in light combat and advanced trainer versions, and we expects to capture 20% of that.