UK pushes to protect aviation players in event of no-deal Brexit
Plans to recruit staff with the expertise to take over the certification of parts and planes should EU divorce cause rethink
Britain’s Civil Aviation Authority (CAA) is stepping up efforts to ensure that airlines and aerospace companies can carry on functioning in the event of a no-deal Brexit.
The regulator has briefed government officials on its plans to recruit staff with the expertise to take over the certification of parts and planes should the split cause Britain to leave the European Aviation Safety Agency (Easa), which is currently responsible for such approvals.
Up to 20 airworthiness engineers are being sought and steps are being taken to estimate the potential workload, CAA policy director Tim Johnson told the Department for Business, Energy and Industry Strategy panel. The aim is to establish UK capability before March’s split from the European Union.
Airlines and manufacturers such as Airbus, which makes wings in the UK, are concerned that a hard Brexit would leave jetliners and components without the required approvals, according to Bloomberg. Mr Johnson said there have been no direct discussions with Easa on no-deal contingency planning, and that the continuation of the status quo remains preferable for both the CAA and the government.
Prime Minister Theresa May is under pressure to show that she is ready to walk away from Brexit talks and opt for a no-deal split if EU negotiators reject the so-called Chequers Plan thrashed out at her country retreat in July. That has led to the publication of a tranche of documents advising businesses on how to prepare for the possibility of talks collapsing, with more to come.
Attention is also focused on advancing bilateral aviation safety agreements (Basas) with the United States, Canada and Brazil, the three main civil aircraft manufacturing nations outside of Europe, Mr Johnson told the panel.
The Basas, which enable mutual recognition of certification, are currently structured with Easa. An older deal exists between Britain and the US but is less comprehensive, excluding the repair and maintenance of American-registered aircraft in the UK.
The aviation sector is anxious new accords will be put in place from the point Britain quits the EU to avoid any question of flights being unable to operate, he said. Other concerns centre on the limited capabilities available for dealing with Brexit requirements, with companies pushing for a collective plan on resourcing the work.
Jet-engines manufacturer Rolls-Royce in July moved the approvals process for its products to a business-jet facility in Dahlewitz, Germany. The shift will not affect jobs but will allow Rolls to continue to get endorsement for its engines from Easa.
Philippe Petitcolin, chief executive of France's Safran, General Electric’s partner in the CFM International engines venture, said on Thursday the French company is working to furnish its UK sites with “all the authorisations they will need to function after Brexit - if they’re needed.”
His comments came on the same day Safran raised full-year forecasts after posting better-than-expected sales and profit in the first half on strong demand for spares and services, driving its shares to a record high.
The world's third-largest aerospace supplier said the switch in its factories to a new model of jet engine was going as planned. Safran added that the integration of cabins maker Zodiac Aerospace was also on track, and it had agreed to compensate Dassault Aviation for a cancelled engine order without disrupting its profit outlook.
Shares in the French company jumped more than 7 per cent to €116.6 (Dh498), an all-time high, before falling off a little. For the year to date, Safran stock is up 27 per cent, according to Reuters.
The company reported a 20.3 per cent underlying rise in first-half recurring operating profit to €1.38 billion on revenue which grew 10.1 per cent to €9.5bn. Analysts were on average expecting €1.24bn of profit on revenue of €9.47bn, according to a Reuters poll.
Safran predicted full-year growth of 20 per cent in recurring operating income, compared with a previous forecast of close to 10 per cent, and revenue up 7 per cent to 9 per cent compared with an earlier target of as much as 4 per cent.
The company strengthened its free cash flow goal, saying this would be "comfortably" above half its operating income.
Following the results, analysts at Bernstein said in a note they expected Safran to "outperform" with a target price of 136 euros a share, citing strong expectations for Safran's Leap aero engine.
Aerospace suppliers are responding to a surge in aircraft orders in recent years to cope with rising travel demand.
Safran said its widely watched civil aftermarket for spares and services grew 12.5 per cent in the first half. It boosted its projection for full-year growth to 10 to 12 per cent from "high single digits".
The Safran-GE joint venture continues to experience delays of about four weeks in delivering the new Leap engines for Airbus and Boeing jets. But Mr Petitcolin pledged to eliminate these delays by the end of the year.
For now, the delays have helped contain estimates for short-term losses from the switch over as the proportion of profitable current-generation deliveries, which are not saddled with the start-up costs of the newer model, remains larger than expected.
Safran's results included a four-month contribution from Zodiac Aerospace, the seats manufacturer acquired by Safran after a production crisis cost the firm its independence.
Safran is pushing ahead with an industrial rescue plan for the business, which produced strong margins before its production lines failed to keep up with a flood of new orders.
"There are no good or bad surprises, but it remains a challenge," Mr Petitcolin said, adding that the turnaround was progressing in line with the parent company's financial road map.
Zodiac has key operations in Britain, where Mr Petitcolin said Safran was building up a buffer stock of parts to cope with any disruption from Britain's decision to leave the EU, mirroring moves by other groups including Airbus.
Updated: September 6, 2018 04:15 PM