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France Aids Aerospace Industry as UK Buries Its Head in The Sand! By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

 

France Gets it – the UK certainly does not, France is just not prepared to allow the impact of COVID-19 to wreck its aerospace manufacturing industry any more than it is prepared to see its flag carrier airline Air France damaged. The French government is forward thinking always looking toward the future whilst the UK government prefers to believe that because its aerospace manufacturing industry has always been there it always it will be! The French government believes in dominance and always fighting to increase market share whilst the UK government believes that its aerospace industry will never be challenged by imposters from abroad because the world owes it a living!

As the UK government gave yet another slap in the face to its struggling aviation industry yesterday by imposing ridiculous and unworkable quarantine rules the French government chose this morning to announce a plan that will represent more than EUR 15 billion of aid, investment, loans and guarantees for the French aerospace manufacturing and airline industry which includes EUR 7 billion of aid already announced for Air France and an acceleration of existing orders for Airbus air to air refuelling tankers and various other military kit. More on this further down but bottom line is that the French government is determined not only to save and protect its most important industries but also to seize every opportunity provided by the weakness of others.

While the moves announced by France will not save all threatened aviation jobs it will go a very long way to protection the majority. The UK government needs to get off its backside and do exactly the same. The world does not owe us a living and without UK active and large-scale government support thousands of UK aerospace industry jobs are at very severe risk. Be under no allusion – the rule book has been torn up and now it is each for its own. The French government has shown grit and determination in order to ensure that its most important industries survive. What has the UK government done so far?  All but nothing!

Not surprisingly, in response to the UK imposing 14-day quarantine rules on the majority of travellers arriving at UK airports, ferry ports and international rail terminals, the French Government lost no time in announcing reciprocal quarantine requirements on those travellers arriving in France from the UK. To be fair, the French probably have more to lose than we do in terms of tourism but I am not going down that particular road here. The result is that the travel industry has now all but ground to a virtual halt – you could almost say that by accident or design we in the UK are a nation that is now all but isolated.

Literally thousands of jobs in the UK aviation industry have already been lost and the longer this rule continues the worse the situation will get. Cruise ships are lying idle scattered off the south coast and Eurostar rail terminals in Brussels, Paris and London St Pancras are empty of passengers. Worse is that as each day goes by what little confidence remains is being lost.

IAG subsidiary airline British Airways, whose handling of staff and customers through the COVID-19 pandemic has been to say the least appalling, talked yesterday about the possibility of suing HMG over the imposition quarantine rules whilst Ryanair’s CEO chose to call the British Government measures a ‘political stunt’. As far as I am concerned, however well intentioned, UK quarantine rules are yet another nail in the UK economic coffin.  

My own view is that such is the underlying outrage and potential for permanent damage the economy that rules that came into effect yesterday will be superseded by ‘air bridge’ solution before the endo of this month and that will allow the vast majority of destinations to be lifted out of the quarantine rules.   

Even so, of far greater importance is the lack of action and support given by the UK government to support its hugely important aerospace and aviation related industries. The devastation of these industries is already staggering beyond belief and as one of my colleagues put it to me last week, “these are industries that are in the process of going from disaster to oblivion”. With a few exceptions, airline industry management do not expect to see recovery starting before 2021 and some believe that aviation as a whole will not return to anything like the considered norm until beyond 2023. As to aerospace manufacturing, no matter what we cannot envisage recovery occurring much before 2023. In terms of survival, without concerted government action to support these vital industries it will be case of man the lifeboats! Is it already too late to save the UK aerospace manufacturing industry? As I sit here and write this today the answer is probably not but without concerted action on the part of government this month, I will soon be saying that it probably is.

So why is it that while other more dynamic and interventionalist minded nations such as the US, France and Germany are readily preparing rescue packages for the airlines and aerospace manufacturing industries our government couldn’t care a damn? I fear that the answer is that too many some of the UK’s most senior politicians simply do not understand the huge value that aviation to the UK economy. Others who may be more politically minded and have constituencies that would be impacted might well see the current crisis as pushing Heathrow runway expansion into the long grass.

The serious aspect of all this is that if we continue going on the way we are not only will the UK airline industry sink into the abyss but so too will the UK’s hugely important and valuable aerospace manufacturing industry. The most likely outcome is that what will happen is that the UK aero sector will all but evaporate (in terms of the supply chain) and that France, Germany, the USA and China will pick up UK market share on the cheap. 

As mentioned, the French government has this morning announced what it termed as a EUR15 billion rescue plan for its aerospace industry warning 100,000 jobs were directly at stake due to the coronavirus crisis travel slump. Including already announced measures, the French government package includes an investment fund that starts at EUR 500 million with a target of 1 billion in order to boost development of medium-sized industry suppliers plus a further EUR 300 million of additional aid to help aerospace sub-contractors modernise plants.

“We must save our aerospace industry,” Finance Minister Bruno Le Maire said as he presented the aid plan, adding that Europe would not sacrifice its place on the world [aerospace manufacturing] market. The French government also plans to invest EUR 1.5 billion spread over three years in order to support research into new environmentally friendly aviation technology.

Well done France. The US has not been a slouch in supporting its aviation and aerospace manufacturing industries through the current COVID-19 crisis and note too how the share price of large sector stocks such as Boeing shot up yesterday. Put that down to the beginnings of confidence rebuilding just as much as bargain basement buying opportunities but the real point is that concerted action to support important industries in the US and France is now very apparent. The pity is that as far as UK aerospace manufacturing and aviation industries are concerned, it’s nowhere to be seen! HMG really does need to step up to the plate in a very major way and do that right now before it really will be too late. Following on from that, commitment to a formal industrial strategy is now an absolute must.

CHW (London – 9th June 2020) 

Howard Wheeldon FRAeS 

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue  


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