Merging for Survival

Britain's ailing aircraft makers believe that misery loves a new company. Last week Vickers-Armstrongs, maker of the turboprop Viscount and Vanguard, and English Electric Co., R.A.F. fighter-plane builder, sped up their longstanding merger talks. They also began courting Bristol Aircraft, maker of the turboprop Britannia. They feel they will need a big combine to compete against the Hawker-Siddeley Group and de Havilland Aircraft Co., which last month announced plans to merge. If stockholders approve, Hawker-Siddeley and de Havilland will become the biggest aircraft company in the Commonwealth (combined assets: $250 million).

Behind the new moves to combine is Duncan Sandys, Britain's Minister of Aviation, who has proposed merger as the only way for the industry to regain its strength and avoid costly duplication of planes and missiles. What made de Havilland, also sought as a partner by Vickers-Armstrongs, so attractive is the fact that it manufactures the Comet, Britain's only commercial pure jet, and has a major share of Britain's missile industry. De Havilland also has orders from British European Airways for 24 of its new short-range jet, the D.H. 121. De Havilland Managing Director Sir Aubrey F. Burke liked the new tie-up, since he is slated to boss the combine's aviation activities. Still to be determined are the fates of the Siddeley Group's Canadian subsidiary, A. V. Roe & Co., and de Havilland Aircraft of Canada.

Even with the mergers, the British aviation industry has a long way to go before it settles down to the two or three major units that Minister Sandys hopes for. Still unspoken for are Fairey Aviation Co., Rotodyne aircraft developer; Handley Page, an R.A.F. jet bomber maker; and such firms as Hunting Aircraft, Short Bros. & Harland, and Westland Aircraft, Britain's leading helicopter maker. But with a dwindling market for military aircraft (less than 50% of industry sales last year v. 65% in 1956) plus U.S. dominance in long-range jetliners, amalgamation appears to be an economic must.

Britain's aircraft makers are not too happy with the extent of Sandys' plans. But he can rely on some powerful weapons. He controls procurement of military aircraft and civilian airliners for government-owned British European Airways and British Overseas Airways as well as some $420 million a year in research and development funds.

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