Government loans Airbus £340 million

The Government is to back an Airbus A350 aircraft project with a £340 million loan, it was announced today.

Business Secretary Lord Mandelson made the announcement on a visit to the Filton, Bristol, plant of Airbus UK which will be making the wings for the new plane.

The Government assistance will create and sustain more than 1,200 at Filton and at Airbus UK's Broughton plant in north Wales.

Described as repayable launch investment, the Government assistance is drawn partially from its £750 million strategic investment fund and will also help create and sustain more than 5,000 jobs within the supply chain across the UK.

The A350 XWB (extra-wide bodied) project consists of three planes capable of carrying 270-350 passengers.

The French and German governments have already announced support for the A350 and Spain, the other Airbus partner country, is still in discussions with Airbus.

Lord Mandelson said today: "This agreement is excellent news for the UK aerospace sector and for the thousands of British workers within Airbus and its UK-based supply chain.

"The UK's aerospace industry is world-class and capable of competing successfully with companies across the world. We recognise the vital role Airbus, and its supply chain, play in the UK."

He went on: "Aerospace is a sector that we are rightly proud of in the UK. It stimulates innovation across industry, demonstrates our capability to work with the most advanced technologies, and provides high-quality, highly skilled employment. It is a sector at the heart of our advanced manufacturing strategy.

"This agreement is further evidence of this Government's long-term commitment to the UK aerospace industry and its future success. Aerospace is one of the UK manufacturing's crown jewels, and manufacturing is one of the UK economy's crown jewels."

Airbus president and chief executive Tom Enders said: "We welcome the UK Government's decision to invest in the A350 XWB (extra-wide bodied), the most advanced, innovative, and eco-efficient aircraft in its market segment.

This partnership with the UK Government means that the UK taxpayer can expect a sound return on their investment, and ensure the aviation industry continues to thrive in Europe and around the world."

Ian Godden, chief executive of the Society of British Aerospace Companies, said "The announcement is very welcome. The Airbus A350 XWB is an extremely important programme for the future of the UK aerospace industry and this investment secures vital work across the sector.

"Over 5,000 jobs are created or supported across the UK supply chain by the A350 programme. The significant technological advances of the composite materials being used means that the importance of the A350 programme in developing the skills and technology for the future sustainability of the UK aerospace industry cannot be exaggerated."

Bernie Hamilton, national officer for aerospace and shipbuilding for the Unite union, said: "This investment is a vote of confidence for UK manufacturing and a ringing endorsement of the Government's aerospace strategy.

"It safeguards thousands of jobs across the UK, but in particular it is good news for jobs in Wales and south west England."

Speaking after the announcement at Airbus' plant in Filton, Bristol, Lord Mandelson denied the £340 million investment was a bail out for the aerospace industry.

He said: "This is neither a bail out or a subsidy, we're not sinking in money from which we'll never see a return. This is a first rate investment in British engineering expertise.

"We're taking from our science base, and from our knowledge base in our economy, new technologies and new innovations which we're now ploughing into and investing into state of the art aircraft wing manufacture.

"It's also technology, innovation and expertise which we can now apply more generally across advanced manufacturing, which demonstrates the investment for the UK as a whole."