Airbus says no-deal Brexit would force it to reconsider UK presence

By Tim Hepher

PARIS (Reuters) - Airbus (Paris:AIR.PA - News) issued its strongest warning yet over the impact of Britain's departure from the European Union, saying that a withdrawal without a deal on future trade would force it to reconsider its long-term position in the UK.

In a memorandum issued late on Thursday, Airbus said softer plans for a transition period ending in December 2020 were still too short for the planemaker to adapt its supply chain and would prevent it from expanding its UK supplier base.

Airbus, which makes wings for all its passenger jets in the UK, said that leaving both the EU's single market and customs union immediately and without any agreed transition would lead to "severe disruption and interruption" of UK production.

"Put simply, a no-deal scenario directly threatens Airbus’ future in the UK," Tom Williams, chief operating officer of Airbus Commercial Aircraft, said.

Airbus is accelerating measures to reduce risks, he said in the statement, without elaborating.

In March, Williams told staff in a video that Airbus was looking at buying more parts to build up a buffer stock to cope with potential disruption when Britain leaves the EU on March 29, 2019.

Echoing calls from Germany's Siemens (SIEGn.DE) earlier this week, Airbus said it needed immediate details on how its operations would need to be organized.

Industry analysts say Airbus would be unlikely to pull out of the UK abruptly because of long lead times and waiting lists for its planes. But it could consider shifting wings for the next generation of single-aisle jets, whose development is expected to begin around the middle of next decade.

Germany, Spain or emerging aerospace suppliers such as South Korea are seen as possible candidates to take work from the UK.

British Prime Minister Theresa May won a crucial Brexit vote in parliament on Wednesday, keeping her divided government's plans to end more than 40 years of British partnership with the European Union on track.

Talks with the bloc have all but stalled, however, with May's top team of ministers at odds over plans for future trading relations with the EU. Businesses complain that makes them unable to plan their investment decisions.

Trade Minister Liam Fox said on Thursday the parliamentary vote on Wednesday had closed the door for good on any chance of the country staying in the EU. He said Britain was keen to ensure continuity as it left the trading bloc.

(Reporting by Tim Hepher; Editing by Tom Brown and Leslie Adler)