BAe- A view through the fog.

Until the news of "merger" (always beware that word and dig beneath it for signs of it really being a takeover by one or other party and certainly the disappearance of the component parts as currenly known) discussions between EADS and BAe, BAe appeared to be doing very well on its own .Its future prospects looked fair despite it having progressively lost interest in civil aircraft since at least the early 1970s. By selling its 20% holding in Airbus in 2006 it had become simply a jobbing tin basher specialising in wing production  for the European consortium and it had become very dependent on the military side of the business. Its focus on the American military has borne some fruit although it will always be precarious and at the mercy of trans Atlantic nationalism and protectionism.

BAe's leadership suddenly declared the EADS merger to be the only game in town. What had changed in a fortnight?

Reports that British politicians will get involved in talking to the Mrs Merkels and Monsieur Hollande sound alarm bells. It sound more like rather desparate sales promotion rather than neutral obstacle clearance. If so it isn't the move of a good negotiator or poker player. It hints at an inexplicable wish to definately sell off/merge BAe rather than a considered "We have no objection if that's what the companies decide to do" stance. Not exactly clever or playing hard to get . As result it's likely to diminish rather than increase BAe's leverage or price of joining. It's called throwing your cards away. EADS can only smile, shake its head and lick its lips.

Apart from the ritual "bigger is better" line BAe's management has not set out a reasoned rationale for merger or done anything convincing to reassure that the large US military market would even be half way open to the merged company if it were to be part of a business with substantial French and German governmental holdings and interests. The USA is at heart protectionist and wasn't born yesterday. Talk of walls of silence between the various divisions dealing with US contracts would be dismissed as not credible.

BAe walking away from its holding in Airbus was a major mistake as amongst other things it removed the virtual guarantee of ongoing A330/340/350/380 airliner series wing and other work . Its proposed merger is another one of serious proportions. There have been others stretching back to decisions from the 1970s to drop first the development of the One-Eleven airliner, its precipitate and oppostunistic bailing out of the Avro RJX airliner in the wake of 9/11. Too often it has behaved like Aesop's dog with a bone and dropped the one in its mouth to chase another fantasy one which has just come into view.  Now it's doing it again.