BAe ditches Jetstream and makes 400 job cuts

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British Aerospace blamed intense international competition yesterday for its decision to end production of the long-running Jetstream regional aircraft at Prestwick in Scotland with the loss of almost 400 jobs.

The move had been expected after Sir Richard Evans, BAe's chief executive, put the future of the revised Jetstream J41 under review because of overcapacity in the regional plane market. The closure will involve 380 job cuts at Prestwick, leaving around 1,000 workers involved in work on larger regional jets and the Nimrod marine patrol plane. A BAe spokesman said the cuts would involve a mixture of voluntary and compulsory redundancies. A further 200 staff will be moved from Jetstream production to other work.

The company said the cost of the reorganisation would be pounds 220m. BAe said had it been done in 1995 it would have produced improvements of pounds 40m a year. The group is thought to have lost around pounds 600m building the plane over the past five years. The commercial aircraft division has long been the principal drain on BAe's cash reserves, losing pounds 78m in 1996 and pounds 118m in 1995.

The decision was greeted with dismay by Brian Donohoe, the Labour MP for Cunninghame South, who asked the Department of Trade and Industry to look at unfair subsidies for regional jets made in other countries. The move is another blow for Prestwick, with complete closure of the site still an option according to BAe in March. Jetstream production capacity at the site had been slashed from 20 aircraft to 10, with 12 currently on the order book.

Separately yesterday there was a jobs boost for Scotland, with news that British Telecom was to build a customer support centre employing 200 staff.