Airbus seeks to cut repayments to government from controversial 'launch investment' for new jets 

Airbus A380
AIrbus wants to pay back less to state investors for each A380 it sells Credit: Getty

Airbus is battling to reduce the amount it pays back to government investors who helped fund the development of its poorly selling A380 superjumbo.

Senior staff from the pan-European plane-maker are understood to have held high-level meetings with top BEIS officials last month to try to negotiate reducing repayments.

Governments helped fund development of the aircraft through controversial “repayable launch investment” (RLI), sinking hundreds of millions into the plane to help finance the multi-billion development cost.

In return for taking on this risk - sometimes called "launch aid" - Airbus agreed to make a repayment to government for each aircraft it sells.

An A380 under construction at Airbus's Toulouse base
An A380 under construction at Airbus's Toulouse base Credit: Geoff Pugh

However, Airbus has taken orders for just 371 of the double-decker A380s - which have a list price of $437m.

The news comes just days after Airbus swooped in to take a 50pc stake in Canadian company Bombardier’s C Series small airliners, which have been hit with punitive export tariffs on their export into the US in a row about illegal state subsidies. 

Thousands of Bombardier staff in Belfast work on parts for the C Series and their jobs were brought into question by the tariffs.

Business Secretary Greg Clark met with Bombardier and Airbus executives in Montreal on Friday to nail down details about the deal, in a move aimed at safeguarding jobs in Northern Ireland, where Bombardier is the biggest employer.   

Tom Williams, the chief operating officer of Airbus, is understood to have met with BEIS officials to try to negotiate a repayment reduction - a process described as a “difficult conversation” by a source with knowledge of the talks. 

Mr Williams, the most senior Briton in the company, has previously admitted the A380 project “will never be profitable”, though Airbus is understood to be breaking even on the airliner when development costs are excluded.

Airbus chief operating officer Tom Williams with an A380
Airbus chief operating officer Tom Williams with an A380

How much is paid back on each airliner sold is a closely guarded commercial secret, but one industry source said Airbus could hand over $1m for each A380 it delivers.

There are already huge doubts about the future of the A380 after Airbus cut the production rate to  to just eight a year from 2019 in light of its poor sales record. At last year’s Farnborough airshow the company said it would slow production to just 12 a year by 2018, down from a rate of 27 the year before.

Airbus is understood to also want to reduce RLI payments on its bestselling A320 smaller airliner. The A320 has been a huge success for the company, with more than 13,000 of the airliners ordered.

Its popularity with airlines means governments who funded RLI for the A320 have recouped their investment many times over and the company wants smaller repayments on each A320 sold to reflect this. The company has previously negotiated smaller RLI payments to reflect the success of the A320.

“Governments take on risk when the fund big programmes like this through RLI that markets are not willing to,” said a government source. “It’s a case of you win some, you lose some.”

A340
Airbus's A340 did not sell as well as was hoped by the plane-maker Credit: Reuters

An earlier Airbus jet, the A340, received RLI funding but investors lost out on the programme as the four-engine airliner was a commercial flop.  

RLI is the subject of a long-running battle in the World Trade Organisation between Airbus and Boeing. The US company argues it amounts to illegal state aid and that Airbus has received $15bn in support from European governments through RLI.

A counter-claim is being fought by Airbus, which says Boeing received subsidies through tax breaks and defence contracts.

Subsidies for aerospace companies have made headlines in recent weeks, with Boeing successfully arguing for a 300pc import tariff to be put on Canadian company Bombardier’s C Series airliners being sold to US carrier Delta. Boeing said financial support from Canada and the UK allowed Bombardier - which employs 4,250 in Northern Ireland, many of whom work on the C series - to sell the jets to Delta at an “absurdly low” prices.

Last week Airbus took a 50pc stake in the C Series, pledging to build the airliner at its Alabama plant in a move that dodged the import duties. 

Both Airbus and BEIS declined to comment on specifics of talks relating to RLI, with both saying they “hold regular meetings about a range of subjects”.

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