Friday, August 24, 2012

EADS-Enaer Partnership Fails Legal Test

An alliance between EADS/Airbus Military and Enaer, the Air Force's aerospace company, has been found to be illegal. Chile's Comptroller General said the proposed partnership violates the laws governing state-owned businesses. Basically, this is how the legal interpretation breaks down: Because of Enaer's obligations under a manufacturing contract with Brazil's Embraer, the Chilean company would have needed to fold all operations except military maintenance into a new company jointly owned with EADS. Chilean law, however, mandates that these operations must always be under direct and sole control of Chile and its armed forces. The framework for the EADS deal, therefore, breaks the law. The decision is a big setback for Enaer, which has been struggling financially and was looking to the EADS alliance as a way to shore up its manufacturing business. The union that represents Enaer workers brought the complaint, fearing that the EADS deal could cost them jobs, even though they were assured of continued employment with the new combined company. Enaer has incurred losses and continues to struggle financially, according to statements published in Chile's Senate website. There's been no public reaction from FACH or the Ministry of Defense.

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