March 2, 2018 / 2:58 PM / 19 days ago

Airbus says Brexit still unclear as it faces extra costs

PARIS (Reuters) - Airbus (AIR.PA) urged Britain on Friday to provide more clarity on post-Brexit customs rules as it faces an imminent rise in spending to start preparing for possible delays in the movement of aircraft parts.

The logo of Airbus is pictured during Airbus annual press conference on the 2017 financial results in Blagnac near Toulouse, France, February 15, 2018. REUTERS/Regis Duvignau

The European planemaker gave a cautious response to a speech by Prime Minister Theresa May setting out her vision for future trade relations between the European Union and Britain, where Airbus makes all wings for its passenger jets.

May has said Britain will not join a customs union with the EU after Brexit, delighting some Brexit supporters who say staying in a customs union would prevent other trade deals, but worrying businesses like Airbus with cross-border supply chains.

May on Friday proposed having either a customs partnership, where Britain would implement EU tariffs on its border for goods intended for the EU, but could set different ones for goods going elsewhere or a streamlined customs arrangement, where jointly implemented measures would minimise frictions to trade.

Addressing other reported concerns from the aviation industry and U.S. regulators, May also said Britain would explore how it could remain a member of a handful of specialist institutions like the European Aviation Safety Agency (EASA).

“Things are moving in the right direction, and we’re pleased to see the comments on EASA,” Airbus UK senior vice president Katherine Bennett said by email.

“But there’s still a lack of clarity we urgently need on what will happen on other important matters such as customs regulation.”


Tom Williams, chief operating officer of the Airbus planemaking arm, earlier warned the “the clock’s running pretty fast” on the need for certainty over the way borders will operate.

    Due to long lead times, Airbus faces immediate decisions on whether to spend more on parts in order to build up an extra buffer stock to cope with potential disruption when Britain leaves the European Union on March 29, 2019, he told staff.

    “If we think there is going to be a kind of gumming up of the docks and the airports, certainly in March of next year and during a transition period, then clearly from our point of view we are going to have to start ordering additional components now, because it is less than 12 months away. And that is at a time when all of our suppliers are already pretty busy”.

    Under a 1980 agreement among 32 members of the World Trade Organization, civil aerospace parts are not subject to duties. But the aerospace industry is concerned that extra paperwork caused by new customs borders may introduce costly delays.

    ADS, a UK trade association for the aerospace, defence, security and space sectors, has welcomed opposition Labour Party leader Jeremy Corbyn’s backing for a customs union with the EU, saying firms will otherwise face 1.5 billion pounds ($2.07 billion) of costs per year.

    But UK trade minister Liam Fox, a pro-Brexit Conservative, has attacked Labour’s proposal to remain in a customs union, calling it a betrayal of the millions of people who voted for Brexit.

    Reporting by Tim Hepher; editing by Sarah White, G Crosse

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