Re Formation of Airbus Co.

BAE Systems PLC
8 January 2001


BAE SYSTEMS and EADS and announce formation of the Airbus company

Amsterdam/London 

BAE SYSTEMS and EADS European Aeronautic Defence and Space Company ('EADS')
announced today that all conditions precedent (including
regulatory approvals) required for the Airbus deal to close have been
fulfilled and agreement on common decisions, including the future Airbus
business plan, has been reached. The Airbus Company will be formally
established by the end of February 2001 (with effect from 1 January 2001).
Airbus is now operating as an integrated enterprise.

Airbus will be owned 20% by BAE SYSTEMS and 80% by EADS. Airbus had
pro forma 1999 consolidated turnover of EUR 15.7 billion and employs some
40,000 people in France, Germany, Spain and the United Kingdom. The
integration of all Airbus assets in Airbus company is expected to generate
synergies of at least EURO 350 million p.a. by 2004.

BAE SYSTEMS and EADS have now provided their Airbus aircraft activities with
an optimised industrial organisation at world-class level to better serve
its customers and to successfully meet the challenges of the aeronautics
industry.

Airbus is now in a position to further enhance its competitive position by
concentrating purchasing power, removing duplication and overheads. In
particular, customers will benefit from a fully integrated customer support
organisation.

For Philippe Camus and Rainer Hertrich, the EADS Co-Chief Executive
Officers, the birth of the Airbus company is 'the latest step taken by EADS
without which great projects such as the launch of the A380 would not have
been possible. The creation of EADS introduced the necessary conditions for
the formation of Airbus company. Six months after its creation, EADS has
once again demonstrated its ability to perform. '

John Weston, Chief Executive, BAE Systems plc added, 'Airbus has been
outstandingly successful in establishing its strong market position. The
restructuring of the business in this way will enable Airbus to deliver still
higher levels of performance to customers and shareholders alike.'


Issued by:-

BAE  SYSTEMS plc
London