Airbus Turbulence Hits Belgian

UNCLAS BRUSSELS 003531

SIPDIS

SIPDIS

STATE FOR EB/TRA, EUR/ERA AND EUR/UBI
FAA FOR DKrimski, AEU-10
USDOC FOR 3133/USFCS/OIO/EUR
DOD FOR SAF/IA

E.O. 12958: N/A
TAGS: EAIR EIND EINV BE
SUBJECT: Airbus Turbulence Hits Belgian
Suppliers

Ref: Brussels 309


1. (U) Summary. Belgian aviation contractors
to Airbus expect a 10 to 15 percent reduction
in sales this year, but claim that to date no
supply contract has been cancelled despite
the slowdown in Airbus A380 production.
Protecting jobs is the principal objective
for Belgian federal and regional governments.
End Summary.


2. (U) Belgian aerotech corporations that
supply Airbus report that the current
production problems of the aircraft
manufacturer are going to have an impact on
them. The companies Sonaca (based in French-
speaking Wallonia, ASCO and Eurair (based in
Dutch-speaking Flanders) are grouped together
under the umbrella of Belairbus. Claude
Bolette, Director of Belairbus, admitted to
Dep Econ Couns October 11 that the Belgian
suppliers expect to register 10-15 percent
lower sales in 2006 due to the A380
production problems. Although Airbus
accounts for half of their business, the
impact is softened by contracts with other
companies, including Boeing. The delays in
production will hurt revenue, said Bollette,
but he stressed that Belairbus companies
still will continue supplying Toulouse with
parts, and officially no orders from Airbus
have been cancelled. Nonetheless, the
situation raises concerns in Belgium, where
maintaining jobs has become a key priority of
the coalition government that is facing a
difficult national election in spring 2007.


3. (SBU) Belairbus is the association formed
in 1979 that has coordinated with Airbus in
R&D and production of aircraft. Belairbus
receives Belgian state support for non-
recurrent costs related to the development of
Airbus models. Among Belairbus participants,
ASCO supplies the leading edge (slats) of
Airbus wings, and Sonaca and Eurair provide
other wing and hydraulic system components.
The Belgian companies expect to participate
in development of the new A350 model the
multinational producer intends to design in
the near future, and anticipate supplying
parts for these aircraft too. (Note:
Belairbus has been criticized in the U.S.
National Trade Estimate Report for
inappropriate state subsidies regarding
development and production of Airbus craft.)
The expertise of Belgian aviation technology
suppliers is widely recognized.


4. (SBU) COMMENT: Unlike previous disputes
regarding Belgian co-production for Airbus,
the present concern is not divided along
linguistic (French/Flemish) lines. Earlier
in 2006, apportionment of Airbus contracts
between Flanders and Wallonia had regional
leaders squabbling (reftel). Given the
current news from Airbus, keeping jobs and
production anywhere in Belgium appears to be
the priority. End Comment.

KOROLOGOS