British defense and aerospace group BAE Systems PLC confirmed on Friday that it was in discussions to sell its 20 percent stake in aircraft maker Airbus.
BAE is negotiating with Franco-German group European Aeronautic Defense & Space Co (EADS), which owns the remaining 80 percent of Airbus, about the sale. EADS recently valued BAE's stake in the aircraft maker at 3.5 billion euros (US$4.3 billion).
"We believe that now is the right time for us to divest our Airbus shareholding to allow us to concentrate on our core trans-Atlantic defense and aerospace strategy," BAE chief executive Mike Turner said in a statement.
BAE has long been expected to sell the Airbus holding as it focuses on building its presence in the giant US defense market through acquisitions. EADS has had an option in place that would let it opt to take over the stake, and has made no secret of the fact that it is eager to take full ownership of Airbus.
Michael Hauger, an EADS spokesman, said on Friday that the company maintains its stance that Airbus is part of its core business.
"EADS has always wanted Airbus," said analyst Edmund Shing at Kepler Equities, though he said the price is high.
BAE shares closed 1 percent higher at ?4.355 (US$7.58) in trading on the London Stock Exchange. EADS shares were down 0.9 percent at 31.88 euros on the Euronext exchange in Paris.
Airbus has eclipsed US-based Boeing as the world's top-selling commercial aircraft manufacturer, delivering more planes than Boeing for the third straight year last year.
The prospect of a sale prompted calls from British unions for emergency talks with BAE about potential job losses among 13,000 workers employed in the UK by the company.
The British workers are involved in building wings for Airbus commercial jets, including the new A380 superjumbo, a 555-seat plane due to go into passenger service at the end of this year.
"We want to find out if production will remain in the UK or whether it will be shifted to countries where the new buyers are based," said Ian Waddle, national officer of the Amicus union.
BAE said there were no implications for jobs and analysts said it was likely work on the wings would continue in the UK under a subcontracting deal.
While the Airbus stake helped drive BAE's profits last year, many analysts believe the booming commercial plane market is set to peak in around two years' time. EADS' joint chief executive Noel Forgeard said recently that he expects Airbus' plane deliveries to peak in 2008.
DaimlerChrysler AG, which announced earlier this week it would sell off 7.5 percent of its 30 percent stake in EADS, on Friday denied a report in French newspaper La Tribune that it was mulling a further stake reduction.
The paper said the company was in talks with German bank KfW about selling off more if its stake in EADS as it continues to focus on its core business of making automobiles.
A DaimlerChrysler spokesman said that was not true and spokeswoman for KfW also denied the report, saying "there are no talks with DaimlerChrysler."
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