Airbus warns of potentially harmful decisions in no-deal Brexit scenario

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(Photo: Airbus)

Airbus chief executive Tom Enders says the aerospace giant may be forced to wind back its investments in the United Kingdom should parliamentarians fail to secure an orderly withdrawal from the European Union.

The warning comes as the the UK approaches the March 29 2019 Brexit deadline without an exit agreement in place.

UK Prime Minister Theresa May’s negotiated agreement with the European Union was overwhelmingly rejected by the House of Commons in early January, leading to heightened fears of a so-called “no-deal Brexit”.

While negotiations between Prime Minister May and other parties in the Parliament are underway in an effort to find common ground, a sharply divided legislature makes achieving consensus a difficult task.

Enders said it was a disgrace businesses were still unable to plan properly for the future more than two years after the 2016 referendum where Britons voted to leave the European Union.

“The UK’s aerospace sector now stands at the precipice,” Enders said on a video posted on the Airbus YouTube channel.

“If there is a no-deal Brexit, we at Airbus will have to make potentially very harmful decisions for the UK, which would be ironic considering back in the mid-1990s it was UK industry that were the architects of greater European aerospace integration.”

Enders said Airbus employed about 14,000 workers in the UK while there were a further 110,000 jobs supported by its operations in the country.

Its UK businesses includes a large manufacturing centre in Broughton, Wales, that assembles wings for Airbus aircraft.

The wings are taken from Broughton to Airbus sites on the European continent for final assembly.

There is also a design and manufacturing centre in Filton, England.

Some Brexit supporters have described warnings by the likes of Airbus, Ford, Sony and others – particularly in the financial sector – to scale down their operations in the UK as empty threats and scare mongering.

However, Enders stressed the prospect was very real should there be a no-deal Brexit.

“Please don’t listen to the Brexiteers’ madness which asserts that, because we have huge plants here, we will not move and we will always be here. They are wrong,” Enders said.

“Of course, it is not possible to pick up and move our large UK factories to other parts of the world immediately. However, aerospace is a long-term business and we could be forced to re-direct future investments in the event of a no-deal Brexit.

“And make no mistake there are plenty of countries out there who would love to build the wings for Airbus aircraft.

“We along with many of our peers have repeatedly called for clarity but we still have no idea what is really going on here.”

A file image of Tom Enders. (Airbus)

A file image of Tom Enders. (Airbus)

High risk of disruptions in no-deal Brexit scenario: IATA

In December, the International Air Transport Association (IATA) regional vice president for Europe Raphael Schvartzman said there was a high risk a no-deal Brexit would cause major disruptions to the aviation industry.

“To avoid serious disruption for airlines and air travelers, the UK government and parliament needs to resolve this impasse,” Schvartzman told reporters at the IATA global media day in Geneva on December 12.

One example of a potential disruptions included the need to prescreen passengers and baggage on flights between the UK and European Union, given there would be no security agreement between the pair.

The European Union Commission has said previously that under a no-deal scenario, capacity between the UK and the European Union would be capped at 2018 levels in 2019.

This would mean airlines would not be able to add flights, which would lead to unmet demand, given the aviation sector grows at about five per cent a year.

“That current flight levels will be protected even with a hard Brexit is an important assurance,” IATA chief executive and director general Alexandre de Juniac said on the IATA website on January 22.

“But with two months left until Britain leaves the EU, airlines still do not know exactly what kind of Brexit they should be planning for.

“And there is legal and commercial uncertainty over how the Commission’s plan to cap flight numbers will work.”

An October 2018 study commissioned by IATA and prepared by Taylor Airey in conjunction with Frontier Economics found there were four key issues with a high impact on the airline industry that had a “severe lack of clarity” – air services agreements; the safety framework; security; and border management.

On the safety framework, IATA noted that the UK would cease to be a member of the European Aviation Safety Agency (EASA) once it left the European Union.

As a result the European Union rules in the field of civil aviation safety would no longer apply to the UK.

“In a worst-case scenario, without agreement on a level of equivalent recognition of UK standards, any aircraft manufactured or maintained in the UK will not be able to fly under EASA’s jurisdiction, nor will any aircraft possessing a type certificate (TC) associated with a UK design organization approval,” IATA said.

“Holders of EASA TCs in the UK would not be able to deliver products such as wings, engines and propellers to EU manufacturers, thereby affecting aircraft production in the EU.”

IATA said its preferred solution would be for the UK to remain in EASA as a third-country member.

“But at minimum, mutual recognition of professional licenses, standards for materials and parts, and other safety elements, should be put in place to come into effect immediately after March,” IATA said.

“It is our understanding that a temporary arrangement is under discussion, but once again, we would like to see greater transparency.”

Enders said that in a global economy, the UK no longer had the capability to go it alone, with major aerospace projects now multinational affairs.

“The global market for aviation is growing at five per cent each year but we are not dependent on the UK for our future,” Enders said.

“Airbus will survive and thrive whatever the outcome. The question is, does the UK wish to be a part of that future success.

“If you are really sure Brexit is the best for Britain come together and deliver a pragmatic withdrawal agreement that allows for an orderly Brexit.”

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VIDEO: Airbus chief executive Tom Enders’ talks about Brexit in this January 23 2019 video published on the Airbus YouTube channel.

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