British Aerospace has been granted launch aid for the Airbus A340-500/600 programme by the UK Government, with the victory attributed to a "battling" performance by trade and industry secretary Margaret Beckett against apparent Treasury scepticism.
A decision on the £123 million ($200 million) repayable loan, which represents around one-third of BAe's share of development costs on the programme (in which it is responsible for the wing) had been pending since late in 1997.
Although Rolls-Royce had earlier received £200 million to cover engine development for the aircraft, there was growing concern that BAe's application might be blocked. Beckett declines to comment on any internal battles within the Government, saying that there were "tough negotiations" with BAe over getting a good deal for both sides. The launch aid is now reclassified as a "public/private partnership", as it was for R-R, which is said to include a better balance of risk sharing, but is still essentially a loan repayable as aircraft are delivered.
BAe has admitted privately that it could have financed the deal from its own resources on only marginally worse terms, but saw the application as a key test for Government commitment to UK industry in the run-up to the Airbus Single Corporate Entity (SCE) and wider European aerospace restructuring. The group had threatened to put work abroad if the loan was not agreed.
"We see the decision as a clear demonstration of the UK Government's support for Airbus," says Beckett, although the official line is that it is based on "commercial" grounds, including the need to keep high-skilled UK jobs. She adds that the Government wants to see "-the SCE go forward", and that support for BAe "no doubt won't do that any harm"
Source: Flight International
