§ 2.45 p.m.
§ The Earl of KINNOULLMy Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they are now close to reaching a decision in conjunction with British Airways and British Aerospace on the initial re-equipment programme for British Airways and whether the recent BAC 1–11 order to Romania assists their decision.
§ Baroness STEDMANMy Lords, the Government are continuing their careful consideration of British Airways' recent aircraft acquisition proposal and will announce their decision as soon as possible. The very welcome Romanian order will, of course, be taken into account in the Government's deliberations.
§ The Earl of KINNOULLMy Lords, I thank the noble Baroness for that reply. 1119 Can she give the House any details of the Romanian order and say whether there is any fresh news about the potential Japanese order for the BAC 1–11? Can she also say whether British Airways have an urgent case for the supply of new aircraft by 1979?
§ Baroness STEDMANMy Lords, so far as the last part of the noble Earl's question is concerned, British Airways need these replacements to come into service in full by 1985, but at present there is no desperate shortage. So far as the Romanian deal is concerned, I understand that an agreement for the licensed manufacture of BAC 1–11 aircraft in Romania, and for technical assistance on manufacture, was signed by British Aerospace and the Romanian Government on 15th June. Further agreements for the supply of three complete aircraft and for components should be signed during the next few months. The agreements provide for the production of 82 aircraft in Romania in the period up to 1995. British Aerospace will supply approximately half the airframe components for the first 22 aircraft, in addition to the three complete aircraft that have been bought, and thereafter, after 1985, the airframes will be wholly Romanian built. Rolls-Royce, who make the Spey engine which powers the 1–11, have signed a framework agreement for the supply of 25 complete engines and for the provision of components for assembly in Romania. In total, the deal is worth over £300 million to the United Kingdom.
So far as the Japanese deal is concerned, that is still, of course, under consideration. We have to remember that the Romanian deal is not likely to affect the Japanese decision. The Japanese requirement is for an aircraft with a short take-off and landing capability, and this version of the BAC 1–11 fits that admirably. But discussions are still going on.
§ The Earl of KIMBERLEYMy Lords, can the Minister say, as British Airways already operate 1–11s, that there is no conceivable reason why part of their short-haul fleet, at any rate, should not be equipped with the new 1–11? Secondly, can she confirm that there is a special built-in sales clause from British Aerospace, saying that if British Airways wish to dispose of these aircraft when 1120 newer ones arrive they will buy them back? Lastly, can she say what incentives, if any, Boeing have offered to buy 737s?
§ Baroness STEDMANMy Lords, so far as I know, there has been no incentive offered by Boeing to buy their planes. The direction as to which aircraft British Airways buy is a matter for discussion. It is rather difficult to talk about it at the moment, because the discussions are just starting. But we expect to be in a position to announce the decision within a matter of days now. So I should rather not be pressed on that point at the moment.
§ The Earl of KIMBERLEYMy Lords, can the noble Baroness confirm that there is a sales clause by British Aerospace to buy back?
§ Baroness STEDMANNo, my Lords, I cannot confirm that.
§ The Earl of KINNOULLMy Lords, I thank the noble Baroness for that very full reply about the Romanian deal. Can she say whether this solves the British Aerospace problem of the continuance in production of the BAC 1–11?
§ Baroness STEDMANNo, my Lords. It is a very welcome addition to their order book, but it does not solve their problem. We are still hoping that there will he some orders from the Japanese deal.
§ Lord TREFGARNEMy Lords, can the noble Baroness say for whom the BAC 1–11s to be built in Romania are destined? Are they all to be used by the Romanians, or will they be for sale elsewhere in the world?
§ Baroness STEDMANMy Lords, my information is that, at one time, the Romanians were the earliest aircraft designers, and they had very good aircraft design engineering projects going in the early 1920s. My understanding is that the Romanians are very anxious to build up their aircraft trade and their manufactures of aircraft again, and these planes are to be the start of this. What will happen to them afterwards, I do not know. So far as I know, whether they are strictly for Romania's use, or whether they can sell them when they have made them, is not strictly tied up in the agreement.
§ Lord TREFGARNEYes, my Lords, but 82 aircraft will be a very great fleet for the Romanian airline, which I believe has 10 or 12 at the moment. Can the noble Baroness assure the House that they are not, at least, destined for British Airways?
§ Baroness STEDMANMy Lords, I cannot even give that assurance at the moment. I will certainly make inquiries and write to the noble Lord.