BAe wins £123m Airbus aid with Blair’s blessing

DTI will charge commercial rates for what it sees as a commercial loan

By George Paloczi-Horvath

The Government has approved £123m of launch aid for two new versions of the Airbus A340 long range airliner.

The Department of Trade and Industry’s decision was taken following prime minister Tony Blair’s backing, which overcame stiff Treasury resistance.

But the DTI is understood to have driven a hard bargain over the aid with British Aerospace, the UK partner in the Airbus consortium with a 20% stake. The DTI said it would obtain a commercial rate of return on what will be a commercial loan.

The aid will go towards the financing of the long range A340-500 and the 380-seat A340-600, which have together already secured more than 100 orders and commitments worth £7.9m from airlines including Virgin Atlantic, Lufthansa, Air Canada and Egypt Air.

The airliners are intended to be direct competitors to the Boeing 777 and smaller versions of the 747.

More than 2,000 jobs at BAe’s Chester and Filton sites are now safeguarded by the launch aid as the company builds all Airbus wings.

Last year Rolls-Royce won £200m in Government launch aid for the Trent 500, the engine which will power the new A340 models.

Airbus has not confirmed suggestions that it has told customers and suppliers it will delay the first deliveries of the A3XX ‘super jumbo’ from 2003 to the third quarter of 2004 because that project overlaps with the A340-500 and 600.