On Friday morning, the stockholders of Westland Helicopters are to fill up London's Royal Albert Hall to decide whether their company should be rescued by the Europeans or Americans.

The emergency shareholders' meeting is taking place in a hall more accustomed to hosting Barry Manilow or Sioxsie and the Banshees, and could draw just as big a crowd. As many as 10,000 shareholders are expected for the meeting, which is costing the company $250 million pounds ($360,000).

The "Westland Affair" has already cost Defense Minister Michael Heseltine his job and wreaked political havoc with Margaret Thatcher's Conservative government and is becoming a litmus test of the future of the European defense industry.

It has brought charges of anti-Americanism against some who oppose selling Westland to Sikorsky, the U.S. helicopter firm, and of anti-Europeanism against their opponents who are fighting a deal with a continental consortium.

About the only people to have done well out of the whole affair are the small company's stockholders, whose stock has increased in value by more than 150 percent.

With debts of nearly three times its assets and a loss last year of $137 million, the Westland rescue offered by Sikorsky, a subsidiary of United Technologies, seemed at first almost an act of charity.

Then, a hastily assembled competing European offer set off a scramble for shares to keep the company out of the hands of the Americans. Sikorsky needs the votes of 75 percent of the shareholders to win approval of its offer, made in partnership with the Italian Fiat conglomerate. Tonight, the betting was that the European group had succeeded in amassing enough stock to block Sikorsky and Fiat.

According to London stock market analysts, Westland's problems go back a long way. It lost money in the 1970s on military helicopter deals with both the British and Egyptian governments and on its hovercraft, but its greatest mistake was an attempt to break into the market for civil helicopters with its own design.

The final blow came in the spring of 1985, when Indian Prime Minister Rajiv Gandhi suggested India might cancel an order for 21 Westland helicopters on which work had already begun. The most recent losses are mostly due to write-downs on that contact, although India has now indicated it will buy the helicopters after all.

With Westland facing receivership in the summer, the government-owned Bank of England stepped in, replacing the management and starting a search for foreign companies to bail out Westland.

In September, Sikorsky and Fiat tentatively agreed to acquire 29.9 percent of Westland in return for a cash injection of $53 million, and other financing that made the total package worth $106 million.

As important as the financial package is what Sikorsky calls the "commercial logic" behind the deal. For 37 years, Westland has built under license and sold profitably four Sikorsky designs. Westland badly needs a product to tide it over until the next decade. Sikorsky's Black Hawk, with proven market success in the U.S., combat success in Grenada and good export potential, is just that product, Sikorsky argues.

"What we propose is a solid, commercial, private-sector solution," said Ed Simons, a Sikorsky spokesman.

Simons admits it would cost more to produce Black Hawks at Westland than at Sikorsky's home base in Stratford, Conn. He acknowledges the likelihood that the Common Market governments might decline to buy Black Hawks because of their growing desire to build up their own defense industries. Britain's defense ministry already has turned it down.

The European consortium seems a motley crew by comparison to the giant Sikorsky/Fiat combine. It consists of four national groups, two of them, Aerospatiale of France and Agusta of Italy, state-owned money-losers. The British component consists of British Aerospace and General Electric Co., both accused of wanting to see Westland remain in European hands so they can continue to supply it with weapons and avionics systems.