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Airbus outlines stark production impact of 'no-deal Brexit'

Airbus has emphasised that disruption to its aircraft production model critically depends on smooth and integrated operational flow, and has outlined the substantial measures it would need to adopt to protect that flow should the UK withdraw from the European Union without an adequate trade agreement.

Exiting from the EU single market and customs union would interrupt the flow of parts to Airbus's production centres, meaning that the airframer would need to store some €1 billion worth of stock as a buffer – at a time when production ramp-up plans are testing suppliers' manufacturing capacity.

Airbus is aiming to increase the monthly production rate of its short- and medium-haul A320 family to 60 aircraft next year, and the company is carrying out studies into rates of 70 or more. The company's long-haul aircraft strategy is focused on the A350 which is also approaching an output rate of 10 per month.

Even if Airbus finds the capacity to build a stockpile of spares, it indicates that this line of defence would only offer a degree of resistance to an interruption of production.

"Despite the incremental stocks, the disruptions in a 'no-deal Brexit' situation are likely to add up to several weeks," it says.

"With no spare capacity left over years to come, every disruption to production would most likely turn into an unrecoverable delay."

Airbus's commercial aircraft revenues last year amounted to nearly €51 billion, and that this turnover – amounting to roughly €1 billion per week – could potentially be lost if it is unable to maintain deliveries. The airframer would suffer additional costs from contractual penalties to customers and production inefficiencies, and an impact to its working capital.

The strict regulations which govern aircraft production also mean that, in the absence of a post-Brexit EU trade agreement, UK aerospace suppliers would lose crucial approvals from the European Aviation Safety Agency.

"Should a single supplier not be certified, its parts cannot be installed," warns Airbus, pointing out that the UK has 4,000 suppliers responsible for providing over 10,000 original components – and that the inability to install even relatively minor parts can potentially block the delivery of an aircraft.

Loss of EASA jurisdiction would force UK aerospace companies to transfer regulatory design, production and maintenance approvals to the EU in order to retain critical certification. Airbus says that the supply chain must be "duly prepared" for the possibility of this scenario.

Withdrawal from the EU without a post-Brexit agreement would spur Airbus to rethink its dependency on the UK's contribution to its activities – including its strategy of concentrating wing production and development in the country.

UK facilities have been assigned the high-profile role of exploring material, manufacturing and assembly techniques for future wing manufacture, but this would also be threatened in a no-deal scenario.

Airbus describes such an outcome as "catastrophic" for the company. "It would impair our ability to benefit from highly qualified British resources," it says. "It would also severely undermine UK efforts to keep a competitive and innovative aerospace industry, while developing high value jobs and competencies."

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