Airbus warns new UK govt of risk to jobs, fighter role

Bloomberg

Airbus SE said the next UK government must guarantee the planemaker’s ability to move people between plants in Britain and continental Europe in order to safeguard the long-term future of production in the country.
It’s likewise vital for aerospace manufacturing to remain exempt from import duties once Britain quits the European Union, Chief Executive Officer Tom Enders said at Airbus’s base in Toulouse, France. The UK also risks losing its place on the next generation of European fighter jet, the company warned.
Airbus employs 15,000 people in Britain at sites including the giant Broughton plant in north Wales, which makes wings for all of the company’s jets. The manufacturer also has a wing-design facility at Filton, in southwest England, as well as space and satellite factories in Portsmouth on the south coast and at Stevenage near London.
Britain faces the prospect of a so-called hung Parliament where no one party can rule alone after Prime Minister Theresa May’s gamble on calling an early poll backfired, casting doubt over the government’s make-up as well as the direction and timing of negotiations on leaving the EU. May signaled that she will try to form an administration to ensure some stability.
While Airbus’s UK sites are among the most efficient in the entire group, “any tariff barriers could also potentially impact the competitiveness of our activities in Britain,” Enders warned. The CEO added that while he’s hopeful the new British administration will understand the “huge importance” of the aerospace and defense industry to the country, there can be no certainties.
Airbus campaigned openly for the UK to remain within the EU prior to last year’s Brexit vote, while making clear that it didn’t intend to leave Britain in the event of a victory for the “Leave” campaign.
The UK is one of Airbus’s four home nations along with France, Germany and Spain, and accounts for a little more than 10 percent of the workforce. The company makes fighter planes, helicopters, satellites and defense equipment as well as jetliners.
Britain’s role as a key partner in European warplane production could be compromised by Brexit, according to Fernando Alonso, head of Airbus’s military-aircraft arm. Predicting that a single plane is likely to be developed in the region to satisfy next-generation fighter needs, he said UK is not guaranteed to take part.
“It’s difficult to see what the future is going to be with Brexit,” he said, adding that in predicting a sole fighter solution he was “thinking more continental.” Britain is a partner in the four-nation Eurofighter program via BAE Systems Plc. France’s Dassault Aviation SA is excluded but may be brought on board in a future structure, Alonso said.
BAE is also now closer to the U.S. via its role on the Lockheed Martin Corp. F-35 model, he said. Cooperation between the U.K. company and Dassault in developing fighter drones, from which Airbus has itself been excluded, could also be jeopardized.
Roger Carr, BAE’s chairman, said after the election result that “the political landscape may have changed, but there remains a clear mission to build a stronger United Kingdom through Brexit and beyond.”
Enders said he’s concerned about the split dividing Qatar from Saudi Arabia and its allies, but doesn’t see Mideast tensions holding back demand. The region has become a major market for Airbus, with three big Gulf carriers plus Turkish Airlines ordering hundreds of wide-body jets to fly passengers through their inter-continental transfer hubs.
“It’s a development that’s troubling for our industry,” Enders said. “But we are far from being overexposed in this region. We should not underestimate the core potential long term.”
About 13 percent of Airbus’s backlog is in the Middle East, according to chief salesman John Leahy, who attended the briefing.