Government to lend Airbus £340m

Lord Mandelson: ''It is not a bail-out''

The government is to give plane manufacturer Airbus up to £340m in loans for new projects, which is expected to secure 5,000 jobs.

The investment, announced by Business Secretary Lord Mandelson on a visit to Airbus, will be in the design and development of the A350.

It was welcomed by unions as a way of sustaining jobs at plants at Filton in Bristol and Broughton in North Wales.

The investment is smaller than those made by France and Germany in the A350.

France and Germany, the UK's partners in the project have promised to invest 1.4bn euros ($2bn; £1.2bn) and 1.1bn euros respectively.

'Good news'

A350 PROJECT Three wide-bodied models, carrying between 270 and 350 passengers Planes will be delivered by 2013 France is investing 1.4bn euros (£1.2bn) and Germany is investing 1.1bn euros in the A350 Airbus says the A350 will be quieter and more fuel-efficient than previous models

Of the jobs being secured in the UK, 1,200 are direct Airbus positions, while the remaining 3,800 are across the supply chain, the Department for Business, Innovation and Skills said.

It was "excellent news" for the UK aerospace sector as a whole and for the British workers within Airbus, Lord Mandelson said.

"It shows British investment in and backing for important new technologies... that are going to maintain our competitive manufacturing strengths in Britain and keep us ahead of the competitive curve," he told the BBC.

'Disappointing'

Airbus chief executive Tom Enders also welcomed the move to invest in the A350 XWB, which is an extra wide-bodied model and will compete with rival Boeing's Dreamliner.

The loans have been criticised by Boeing.

"In less than three weeks, the World Trade Organisation will rule on the consistency with world trade rules of government subsidies to Airbus," its spokesman said.

"It is therefore disappointing that governments should proceed with subsidies on the eve of a WTO decision."

'Vital work'

Bernie Hamilton, Unite national officer for aerospace and shipbuilding, said: "This investment is a vote of confidence for UK manufacturing and a ringing endorsement of the government's aerospace strategy.

"It safeguards thousands of jobs across the UK, but in particular, it is good news for jobs in Wales and the South West."

Ian Godden, chief executive of the Society of British Aerospace Companies, said: "The Airbus A350 XWB is an extremely important programme for the future of the UK aerospace industry and this investment secures vital work across the sector."

He added that the A350 programme's role in developing skills and technology for the future sustainability of the UK aerospace industry could not be exaggerated.

The government's £60m investment in GKN, also a so-called repayable launch investment, came as GKN bought part of the manufacturing operation of the Airbus factory in Filton for £136m last year.