The changing face of BAe

LOVE it or loathe it - and the company has detractors aplenty - British Aerospace seems incapable of remaining out of the headlines. Regardless of who wins control of VSEL, BAe's most recent move refocuses attention on its long-term prospects as it attempts to expand its core defence business. As one of the UK's biggest businesses - and employers - it is watched closely not just by the City, but also Whitehall, the unions and politicians.

Its establishment status and political clout are reflected in the fact that it is one of the few companies to list in its annual report and accounts staff and former staff who have been awarded honours by the Queen. (For the record, in 1993 it picked up two CBEs, four OBEs, and seven MBEs.)

The current controversy over Mark Thatcher's alleged commission from the Al Yamamah Saudi Arabian deal is further proof of its political stature - though the company has denied any impropriety in winning the contract.

Yet only three years ago, it was as good as bankrupt. Since then a much-vaunted joint venture between Taiwan and Avro, the company's regional jet division, bit the dust late last year. In the spring, it encountered another storm of controversy when it sold Rover cars to BMW of Germany. But that sale capped a process that has transformed the company from a bloated loss-maker to a potential money maker.

BAe's pounds 478.5m offer for VSEL is its biggest ever. If successful, does it mark a new chapter in the company's chequered history? Or will its accident-prone tendencies reassert themselves, and stifle the company's slow return to profitability?

This is a chronology of the changing face of BAe:

August 1988. Buys Rover Group for pounds 150m, but BAe's ambitions to turn the business round are never fully realised.

August 1989. Company pays pounds 278m for property concern Arlington Securities. Coming at the peak of the UK commercial property boom, BAe's timing could not have been worse.

October 1991. Hard on the heels of a profits warning, BAe launches a pounds 432m rights issue to reduce debt and shore up its eroded equity base. The news was greeted with hostility by the City and the press.

September 1992. Interim results shock the City as the company announces a pounds 1bn provision for restructuring its commercial aircraft and regional jet and turboprop activities. This was arguably the company's nadir. Two years on, despite greater optimism over the problem businesses, questions remain as to their long- term viability. Most analysts expect the turboprop business to be sold off soon.

January 1993. A pounds 5bn Saudi Arabia order for 48 Tornadoes as part of the continuing Al Yamamah deal boosts sentiment in the shares. The deal is worth pounds 2bn a year in revenues for the foreseeable future.

April 1993. A pounds 500m order for 24 Hawker aircraft from Indonesia lifts the shares further.

July 1993. Refinances pounds 1.5bn of bank debt, and changes its onerous banking covenants, which could earlier have pushed it close to bankruptcy.

August 1993. Sale of Corporate Jets for pounds 250m to Raytheon of the US completed. The move suggests that then chairman John Cahill's pledge to restructure and refocus is real.

December 1993. Disposal of construction group Ballast Needham to a Dutch and German consortium for pounds 175m.

January 1994. Announces sale of Rover Group to BMW for pounds 800m. A storm of protest raised at the removal from UK ownership of the country's last volume car manufacturer. But City enthusiasm sweeps the shares higher and back to 1990 levels, before the rot set in.

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