Britain Expected To Back A350 – US-FOREX.US
European airplane manufacturer Airbus is likely to get a positive boost to its A350 jet program on Friday, according to industry sources, as British business secretary Peter Mandelson will very probably announce financing support for the mid-sized airliner and might even specify a sum of close to 1 billion at a press conference.Several industry-watchers told Forbes on Thursday that Mandelson, who is scheduled to make an announcement at Airbus’ British site in Filton Friday morning, would be keen to present any financing package or work-share agreement as a boost to the British aerospace industry. If a loan of around 1 billion is confirmed, Britain may likely silence critics by saying that France and Germany will pay the lion’s share of overall development costs.”I can confirm that we will tomorrow host Lord Mandelson for his announcement,” said a spokesman for Airbus. But he would not confirm or deny the rumors that the announcement would concern the A350 or support for a financing package.A spokeswoman for the Department for Business, Innovation and Skills refused to comment.Analysts estimate Airbus parent European Aeronautic Defense and Space
is looking to raise around 30% of the A350′s total 15 billion in development costs from launch partners France, Germany, Britain and Spain. Britain is unlikely to pay as much as France or Germany, which are expected to advance 2 billion and 1.5 billion respectively, but a loan of up to 1 billion would be an important step. It might also add momentum to ongoing discussions between the partners, with Germany reportedly taking a reticent line.”It’s probably very true that the U.K. is looking to its own interests first [by securing more work for British industry],” said Doug McVitie, chief consultant at Arran Aerospace, “but it is also I’m sure to put more pressure on those who have not yet signed up.”
Not everyone thinks Mandelson’s announcement will involve specific financing terms. Evolution Securities analyst Nick Cunningham said any launch aid announcement would risk Britain’s close relationship with the United States, which has filed complaints against Airbus at the World Trade Organization over what it sees as “illegal” aid from states. Morgan Stanley analyst Rupinder Vig also said that it seemed unlikely that Mandelson would announce a done-and-dusted deal, at a time when Prime Minister Gordon Brown was on holiday and when other European leaders weren’t planning any announcements.But given that EADS is under pressure to succeed with the A350-not just because it has landed fewer orders than the Boeing
787 Dreamliner, but also because its A380 “superjumbo” program has yet to make any money-it is hard to see why else it would allow Mandelson to take center-stage at Filton. EADS issued a one billion-euro corporate bond earlier this month, even though it is already sitting on 8 billion euros of cash; clearly the future of commercial aircraft is not entirely rosy, and the stakes for the A350 are high.