BOEING MAY GET WISH FOR AIRBUS; MERGER COULD MAKE NO. 2 JET MAKER ITS OWN CORPORATE ENTITY.

Byline: George Tibbits Associated Press 

For years, Boeing executives have groused that arch-competitor Airbus Industrie has had an unfair advantage because it doesn't have to answer to shareholders.

Be careful what you wish for.

A merger of European aerospace companies has raised the odds that Airbus will be transformed into a publicly traded company, giving Boeing the even playing field it says it has always sought. But analysts warn it could also get an even fiercer competitor.

``It's either good news or bad news,'' said Richard Aboulafia, aerospace analyst with The Teal Group.

Good news for Boeing, he said, if Airbus is subject to the same pressures from stockholders as Boeing: having to detail and justify business decisions and make its owners money.

Bad news, if Airbus is a lean, nimble company supporting its already strong product line.

With great fanfare and the blessings of the French and German heads of state, the German aerospace unit of DaimlerChrysler and France's Aerospatiale Matra announced Thursday they plan to merge next year.

The new entity, to be called the European Aeronautic, Defense and Space Co., or EADS, would control up to 80 percent of Airbus, a four-nation European consortium. The remaining 20 percent is held by British Aerospace.

EADS would be 60 percent owned by DaimlerChrysler, the French Lagardere Group and the French government. The remaining 40 percent would be sold on the stock market.

The move improves the chances for transforming Airbus, the No. 2 commercial jet maker behind Boeing, into its own corporate entity, though talks on revamping Airbus have recently bogged down.

Airbus already is a tough competitor. It has outpaced Boeing in new aircraft orders so far this year, with 358 to Boeing's 166. Boeing, however, had delivered 455 airplanes as of Sept. 30, compared with 211 for Airbus.

The merger announcement came minutes before Boeing released its third-quarter financial results showing a healthy 37 percent rise in profits. In a teleconference, Phil Condit, Boeing's chairman and chief executive officer, said the change would have little immediate effect and repeated the company line.

``As they move to a truly commercial basis, I think that's good,'' Condit said.

Condit cited an order by Denver-based Frontier Airlines for some 20 new jets that Boeing lost because it would not match the lower prices Airbus offered.

Airbus and Frontier officials declined to comment on the pending order.

The pricing argument can cut both ways. Airbus complained this summer when Boeing, to get Singapore Airlines to order new 777s, agreed to buy 17 Airbus A340 jetliners from Singapore and resell them. Boeing claims the deal was profitable - some analysts have doubts - but it was a strategic coup, placing Boeing jets with a key Asian carrier.

Boeing has long argued that European government subsidies to Airbus give it an unfair advantage. Europeans counter that Boeing uses U.S. defense contracts to develop commercial airplane technologies.

When Boeing merged with McDonnell Douglas two years ago, Airbus and its supporters howled that the U.S. government was allowing the creation of a colossus that would stifle global competition.

Boeing would welcome ``a normal corporate entity'' as a competitor, said Paul Nisbet, analyst with JSA Research Inc., ``rather than having to do battle with the European governments.''

With shareholders, Airbus ``will have to generate a reasonable return on investment, which they are not doing now, and is not part of their thinking right now,'' said Robert Toomey, analyst with Dain Rauscher-PCG in Seattle.

Airbus ``is not acting rationally because it is subsidized by government,'' he said.

These days, Boeing emphasizes profits, efficiency, cost-cutting and axing programs that don't pull their weight - moves that Wall Street has rewarded.

If Airbus does likewise, Aboulafia and others say it would be an even more formidable opponent.

A well-run corporation would greatly increase Airbus' ability to raise money for new projects. EADS itself, if done right, ``gives an excellent shell within which to shuffle assets and create efficient organizations to address market needs,'' Aboulafia said.