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TREASURY INTERVENTION IN TRAINER DEAL RISKS UK SHARE

WILL TREASURY INTERVENTION IN TRAINER DEAL RISK POSSIBILITY OF UK SHARING IN MULTI-MILLION POUND TRAINER MARKET?

18 Jun 03. Following our story last week (See ‘BAE SURROUNDED IN MERGER SPECULATION – MAJOR TRAINING DEAL ON HOLD?’, BATTLESPACE UPDATE Vol.5 ISSUE 25, June 11th 2003)with regard to the Treasury intervention in the BAE unsolicited PFI offer for the fighter training requirement, it appears that New Labour has developed an antipathy to anything with ‘Made by BAE Systems’ on the box. BAE Systems told BATTLESPACE at Paris that the MoD believed that BAE was benefiting to the tune of 40% of the defence budget when after examination it is only 25% at most. Over the trainer PFI deal it has a chance to put the boot in again at the expense of a national asset, the Hawk Trainer, Britain’s most successful home grown aircraft.

More worryingly the government appears to have turned its back on industry and believes that the British economy can survive as a ‘post-industrial’ service industry-based economy. The Treasury may save money on the study for another trainer but the downside in the loss of technology and jobs would be a catastrophe.

Dick Evans, Chairman of BAE said that the decision to create a competition over the Hawk was political, a possible push for a BAE/Finmeccanica merger on the back of this deal. The Hawk has produced billions of dollars in earnings from a UK Government investment of £1bn equivalent in 1972 with over 800 aircraft supplied to 18 nations. The fact that Korea and Lockheed Martin have invested millions in the T50 and Aermaachi millions in the 346 must give an indication as to the size of the potential market. All three firms estimate a market of between 1500 and 1700 aircraft over the next 20 years. The two contenders are hardly off the drawing board and the 346 has no order from Italy. As we write BAE is struggling to finalise a 17 year deal with the Indian Government for 66 aircraft which can not be signed off if the UK may not buy the plane for its own air force. But this is just the start, the UK PFI training requirement is for 31 aircraft to replace those at 19 Squadron in RAF Valley, another 13 for other replacements in a total fleet of 176 aircraft. The Eurotrainer requirement requires at least 100 aircraft and these are all in the short term.

But as Dave Potter of BAE told BATTLESPACE, “We have heard stories of the Hawk being an old aircraft. The Hawk of today is totally different from that of the 1972 era. We have a new glass cockpit, new avionics and wing and tail sections with some fly-by-wire capability. We can fly supersonic if required but most nations have dropped this requirement for training. Lastly, our customers like the Hawk and its design, it may look the same from the outside, but from the inside it is world-class as recent sales to Australia, Bahrain and South Africa clearly demonstrate.”

Both the T50 and the 346 are aircraft in very early stages of development and stand little chance of being fully proven for an ISD for the UK of 2007. Both claim higher thrust but this is not required for young pilots and we have witnessed the Hawk trouncing the twin engined Alpha jet across the world (the 346 is twin engined and thus more expensive to maintain).

The Unions and the DTI are fighting hard on this one to preserve 1900 jobs at Brough and many more at associated businesses such as Rolls-Royce and Smiths, and the UK’s only home grown aircraft, but will New Labour fight on and not rest until our aerospace and defence industries, all world beaters, are consigned to the bin alongside the electronics and car industries, don’t bet on a change of mind in the short term.

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