Select Committee on Trade and Industry Ninth Report


Airbus has developed into a major player in the global civil aircraft market since its creation in 1970. However, in recent times it has faced a number of challenges, including reduced competitiveness as a result of the weak US dollar; delays and cost overruns on its flagship A380 aircraft; and the need to finance its latest project, the long range A350 XWB (extra wide body). It is for this reason that it launched its Power8 restructuring programme in October 2006. The outcome of Power8 and the allocation of work packages for the A350 XWB has been a good one for the UK. Working together, Airbus UK and the Government have won a 20% work share, with overall leadership of wing development, manufacture and assembly for the A350 XWB. They both deserve congratulations on this outcome.

Elsewhere, the company is now in negotiations to agree a risk-sharing partner for its Filton site, near Bristol, which will enable the development of high technology composite materials there. Just over 1,500 jobs are to go across the UK's two Airbus sites, but this reflects a fair proportion of the 10,000 jobs which will be lost across the company. At the same time, though, UK companies may benefit from the company's intention to double the level of work which it outsources. Overall, the outcome of Power8 should ensure the future of Airbus UK for the foreseeable future. However, political challenges to the agreed distribution of work, especially from France, may emerge. Any such challenge could require further determined intervention by the UK Government.

There remain challenges which the Government and Airbus UK must work together to overcome. The UK's ability to influence the parent company, EADS, has been significantly diminished by the sale to EADS of BAE Systems' 20% stake in Airbus. In addition, ongoing investment in research and technology development is necessary to implement the UK's National Aerospace Technology Strategy, the delivery of which is to be achieved both through national and regional channels. The current WTO dispute between the US and the EU on government subsidies for Boeing and Airbus will also shape the way in which the UK supports the aerospace sector in the future. Looking ahead, in the context of growing competition from China and India, the key challenge will be to position the UK to win further work on the next major Airbus programme—the replacement of the single aisle A320, aimed at a market which will constitute around 70% of the expected demand for aircraft over the next 20 years.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2007
Prepared 26 June 2007