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Fri, Feb 23, 2007

Putin's Comments Indicate Russia Wants Larger Share Of EADS

Airbus Strife May Be Opportunity To Take Greater Control

Just as Russian carrier Aeroflot announced it will all-but-certainly sign with Airbus to replace several aging Cold War-era airliners in its fleet, Russian President Vladimir Putin made comments indicating he would like a larger stake in Airbus parent company EADS.

According to Forbes, several statements made by the Russian president appear to contradict Putin's earlier assertions he has no intention of forcibly increasing Russia's stake in the European aerospace consortium, beyond the five percent stake now held by state-owned lender OAO Vneshtorgbank.

On Wednesday, Putin told France's foreign and defense ministers he was interested in a greater stake in EADS, after all -- saying such "meaningful cooperation would be interesting and useful not only for Russian producers but for their European partners."

The larger acquisition would be "in no way a step in the direction of an unfriendly acquisition," Putin continued, adding "This purchase is not a hostile takeover. We are ready for constructive interaction and we would like the companies to reach an agreement [on further cooperation]."

RIA Novosti added, however, that if Russia can't reach agreements with other shareholders, Putin would direct Russian financial institutions to purchase the needed shares on the common market.

Arran Aerospace analyst Doug McVitie told Forbes Putin may not necessarily be trying to assert control over the European aerospace industry... but may merely be trying to gain a larger stake in EADS, while the getting's good.

"There's also the fact that Putin still probably thinks Russia has a role to play in EADS, and now's the time to try for it while they're in even more disarray than usual," said McVitie -- speaking of EADS current financial woes, and seeming chaos stemming from the postponement of an Airbus restructuring plan this week.

Putin appears to be seeking aerospace ties, McVitie said, in an attempt to diversify Russia's state-held investments away from oil and gas interests.

But, the analyst added, French and German officials will likely not agree Putin's motives are altruistic.

"[German Chancellor Angela] Merkel and [French President Jacques] Chirac would be against Russia increasing its take in EADS not only because they have their plates full already dealing with Airbus, but because the potential Russian funds come with strings attached," he said.

"Russia wants to participate, not just be a shareholder. Contrast this with Qatar, which is thinking of just letting its money do the talking without any desire to interfere."

FMI: www.airbus.com

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