GKN faces copter merger call

ENGINEERING group GKN is facing calls to merge its AugustaWestland helicopter venture with a rival, now a sales downturn has forced it to axe 950 jobs.

Analysts say the cuts will make Augusta - a 50/50 venture with Italy's Finmeccanica - a much more attractive takeover target, removing most of the unwanted costs from the business.

Augusta still has a strong £4.5bn order book. It is nearing the end of a contract to build 66 transport helicopters and 67 Apache attack helicopters for the British Army and Royal Navy. However, it has no major orders to take up the spare capacity until next year.

GKN chief executive Marcus Beresford said most of the cuts will fall at Yeovil, Somerset, but Augusta will also close its site at Weston-super-Mare.

'It was always foreseen that helicopter output in the UK would peak at this time,' he said. 'The job cuts are clearly very regrettable, but are necessary to retain the high levels of operational efficiency that have been achieved in the UK.' GKN and Finmeccanica will share a £22m charge to cover redundancies and reorganisation.

AugustaWestland is the second largest helicopter manufacturer after Boeing and would become a formidable competitor if it combined with a rival such as Sikorsky, owned by United Technologies of the US. GKN may also benefit from a tighter focus on car parts, which currently generate more than three-quarters of its sales.