BAe sure of pounds 450m aid to launch jumbo

THE GOVERNMENT is set to offer British Aerospace launch aid of up to pounds 450m in the next few weeks to help fund development of the 600- seater super-jumbo, the Airbus A3XX.

BAe said yesterday that it was confident of being awarded the launch aid before Christmas but cautioned that the money would have to be offered on acceptable commercial terms.

The offer of launch aid will enable BAe and the three other Airbus partners to decide whether to go ahead with the $11bn development of the aircraft.

Under an agreement with the United States, the four Airbus governments - Britain, Germany, France and Spain - are able to fund up to a third of the costs of new large aircraft. Airbus wants a further third of the funding to come from other risk-sharing partners outside the consortium.

The offer of launch aid for the A3XX will be tied to an agreement that the consortium converts into a single corporate entity before development of the new jet begins.

Airbus is estimated to have lost around pounds 100m in the first half of the year, based on BAe's own share of the losses which is in the order of pounds 20m. However, BAe said that its work as an Airbus partner supplying wings was profitable.

Pre-tax profits fell from pounds 725m to pounds 132m because of one-off exceptional gains last year and a pounds 190m charge this year to pay for redundancies and restructuring at Royal Ordnance and BAe's military aircraft division.

John Weston, BAe's chief executive, said he was confident that BAe would beat the pounds 275m target for cost savings from the merger with GEC's Marconi defence electronics arm.