INDUSTRY (Hansard, 6 November 1978)

§ Mr. Kaufman

British Aerospace concluded an industrial agreement in August with the main existing partners in Airbus Industrie, subject to the approval of the Governments concerned. On 31st August my right hon. Friend announced that the Government were willing to endorse that industrial agreement. The French and German Governments subsequently raised certain points regarding the agreement; these have been satisfactorily resolved. The way is now clear for British Aerospace to become a full member of Airbus Industrie from 1st January 1979.

Following are fuller details of the agreed arrangements: On 18th August British Aerospace, and Aerospatiale and Deutsche Airbus—the main existing members of Airbus Industrie—initialled an industrial agreement, subject to the approval of their respective Governments. The details of this agreement are principally a matter for British Aerospace; but the main features are as follows:

(a) British Aerospace will become a full member of Airbus Industrie from 1st January 1979; it will have a share of 20 per cent., and will be subject to the normal obligations of partners in Airbus Industrie regarding the financing of work, and so on.
(b) British Aerospace will be accorded representation appropriate to a major member on the supervisory board of Airbus Industrie; major decisions of the board will need a majority of more than 80 per cent., instead of 75 per cent. as at present.
(c) British Aerospace will continue to participate in the A300 B2/B4 programme; will have a substantial share in the new A310 derivative of the airbus; and will be entitled to a substantial share of future Airbus Industrie programmes.
(d) All the parties to the agreement undertake not to participate in projects competing with present or future Airbus Industrie programmes, except with the agreement of the others.

In subsequent discussions it was agreed that the position on voting rights outlined above should apply to all future Airbus Industrie programmes, to the A310 programme, and to questions relating to that programme and the B2/B4 programme. However, until delivery of 20W the 150th B2/B4 aircraft or at the latest 1st August 1981, the existing rule requiring a majority of only 75 per cent. will continue to apply for the purpose of decisions specifically related to development of the B2/B4 programme in situations in which those aircraft are in competition with aircraft fitted with British engines. The French and German partners have indicated that if a letter of intent to purchase should be received by Airbus Industrie from British Airways the provisions mentioned in (b) above would apply forthwith. The Government have endorsed these industrial arrangements, as have the French and German Governments. British Airways have told the Government that if, over and above the aircraft which they have just acquired, needs were to be identified in the area of wide-bodied medium-range aircraft of 200 seats, comparisons they have made show the A310 to be the aircraft which would best meet such new needs. In addition, the Government have reached agreement with the French and German Governments regarding the principles of co-operation on the airbus programme. These will be the basis for a formal inter-governmental agreement, to be concluded in due course, regarding the A310 programme and British Aerospace's membership of Airbus Industrie. The way is now clear for British Aerospace to become a full member of Airbus Industrie on 1st January 1979. This offers the corporation an opportunity to play a major part in the development of a European civil aircraft industry. It also offers important new openings for the rest of the British aerospace industry and all who work in it. British Aerospace considers that joining Airbus Industrie will make a significant contribution to stabilising employment levels in the corporation and should help to safeguard several thousand jobs. British Aerospace has emphasised that membership of Airbus Industrie will facilitate its longer-term policy of getting a better balance between military and civil programmes and the possibility of a more stable level of employment. It estimates that it will require additional investment of some £250 million at 1978 prices by 1983. To assist the corporation I propose, subject to the approval of Parliament, to make available to British Aerospace up to £50 million under section 45 of the Aircraft and Shipbuilding Industries Act 1977. The necessary draft order under section 45(4) and (5) of the Act will be laid before the House in due course. During the past months the Government have taken a series of decisions affecting the future operations of British Aerospace, British Airways and Rolls-Royce. All these corporations have to work in a highly competitive environment; and it is the policy of the Government that they should be supported as far as possible in the decisions which they take on commercial grounds.