Firms in battle for £120m Airbus aid

Aerospace companies are fighting a last-ditch campaign to secure £120m of state aid for development of the Airbus A340-500 and 600 airliners. Senior British Aerospace executives were this week due to lobby politicians and suppliers to stress the importance of the new A340 projects and the risks to BAe’s future position in the European consortium […]

Aerospace companies are fighting a last-ditch campaign to secure £120m of state aid for development of the Airbus A340-500 and 600 airliners.

Senior British Aerospace executives were this week due to lobby politicians and suppliers to stress the importance of the new A340 projects and the risks to BAe’s future position in the European consortium in which it has a 20% stake.

BAe said that as far as it was aware no decision had yet been made but it was worried the application might be rejected, undermining Britain’s commitment to the project.

The go-ahead for industrial development of the airliners awaits launch orders. Sabena this week said it will order 34 airbus aircraft, and Lufthansa and Swissair are possible candidates.

BAe originally requested the money in July but has been galvanised into action following the announcement last week that the Government will inject up to £200m into developing three new versions of Rolls-Royce’s Trent turbofan – one of which will be offered for the new A340s.

Rolls-Royce said the market for these engines could be worth over £50bn.

Industry minister John Battle said the cash would secure 16,000 jobs at Rolls-Royce and its suppliers. John Rose, chief executive, said it could now attack the market for all new large airliners with a single engine family.

Battle said the investment was commercial and reflected the risk that the taxpayer has been asked to share. Neither the Department of Trade and Industry or Rolls-Royce would quantify this, but the Government expects a major commercial return.

Battle said this approach would `inform its consideration’ of future applications for support from the civil aviation industry, reinforcing expectations of aid for the new A340s.

The £200m investment will be phased in over four years and will top up launch funds for the Trent 8104, 500 and 600, all or which are intended for new Airbus and Boeing airliners.

While the Trent 500 has been picked by Airbus for A340-500 and 600, Rolls-Royce and Boeing are offering Trent 8104 for the Boeing 777-200X and 300X.