£340m government loan will safeguard 5,000 Airbus jobs

Published on 14/08/2009 21:38

AIRBUS is to receive a £340 million loan from the UK government, a move designed to safeguard more than 5,000 jobs.

The loan, which follows larger investments by the French and German governments, will be used in the development of the Airbus A350.

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

The loan will sustain about 1,200 jobs at the plant, and the government said work on the A350 project would safeguard about 5,000 in the engineering supply chain.

Designed to take on the Boeing Dreamliner, the A350 will carry between 270 and 350 passengers.

Lord Mandelson said: "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 government has insisted that the money is not a bail-out, describing it as a "repayable launch investment," drawn partially from its 750m strategic investment fund.

While the news was welcomed by Airbus, there was criticism from commentators that the government had not gone far enough, after the French and German governments each loaned about 1bn towards the project. Airbus reportedly asked the UK government for around 700m.

Howard Wheeldon, an analyst at BGC Partners, warned that a lack of support from the UK could mean work on future Airbus projects is awarded to the continent.

"All that I can see is blood on the hands of the Business Secretary, Lord Mandelson – the blood of many more British jobs being lost in ten to 15 years time," Wheeldon said.