Airlines (Purchasing Decisions) (Hansard, 27 November 1991)

§ 4. Mr. Flannery
To ask the Secretary of State for Trade and Industry if he will meet representatives of British airlines to discuss the consequences for the British aircraft engineering industry of their recent decisions on purchasing aircraft and engines.

§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)
No, Sir.

§ Mr. Flannery
Has not the Minister discussed with the chairman of British Airways the very large order for American planes with American engines? Does not he understand the impact that that will have on British Aerospace and Rolls-Royce? It would have been possible for British Aerospace to manufacture the wings and for Rolls-Royce to manufacture the engines. British manufacturing is taking a blow and all that the Minister can do is to give a monosyllabic, negative answer without any explanation.

§ Mr. Leigh
Naturally, I understand Rolls-Royce's disappointment, but we must put the matter in perspective. Rolls-Royce's order book stands at a record £7 billion. Some two thirds of the turnover of the British aerospace industry is exported. It would be against our interests to adopt a more protectionist and interventionist policy in aerospace, because it could lead to other countries adopting the same approach. That would be against the interests of our industry.

§ Mr. Hayward
Does my hon. Friend recognise that there is disappointment on both sides of the Chamber at the recent decision by British Airways? Although we recognise that it was a business decision, there are substantial implications, particularly for Rolls-Royce. I reiterate what the Minister said: the aerospace industry in general is exporting more than ever before in the face of substantial competition from abroad.

§ Mr. Leigh
My hon. Friend is right. Rolls-Royce is having success with its excellent new Trent engines and has succeeded in getting an order for the Airbus A330. We wish the company every success for the future. My hon. Friend is right to pinpoint the fact that it would be against the interests of British Airways and Rolls-Royce for politicians to second-guess the commercial decision making of private companies.

§ Mr. Hoyle
Does not the Minister realise that nobody is asking the Government to second-guess? He is merely being asked why he did not discuss the matter with Lord King. Further, does he realise that Rolls-Royce now has very little chance of being specified as the lead engine on the 777? The fact that the alternative was a stretch version of the A330 would have meant, as my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) said, 898 that both the wings and the aero engines would have been manufactured in Britain. That would have been good for Britain, for employment, for British Airways, for British Aerospace and for Rolls-Royce.

§ Mr. Leigh
There was a time when Ministers in the Department of Trade and Industry not only discussed these matters with the industries but directed them. I remind the Opposition that in those days, when British Airways was still in state ownership, it made a loss of £140 million before tax. By contrast, in 1990 the airline posted a profit of £130 million. The question is really an attack on the privatisation of British Airways, which is a successful company operating in a highly competitive marketplace. Nothing would be more disastrous for the future of British Airways than for it to be summoned to my right hon. Friend's office and told how to run its affairs. We used to do things that way and British Airways made a thumping loss as a result.