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British Aircraft Corporation

Volume 893: debated on Monday 16 June 1975

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asked the Secretary of State for Industry what help the Government have given to the British Aircraft Corporation to meet the recently announced order from Romania for five BAC 1–11 aircraft.

The Government have given the British Aircraft Corporation full support in its achievement of this further export order for the BAC 1–11 aircraft with its proven operational record. Because reactivating the production line for only five Series 500 aircraft would not be economic, the Government have agreed, at the request of BAC, to accept some of the financial risk by underwriting the liability of initial loss on these five aircraft—and the cost of producing parts for additional aircraft—up to a limit of £3·9 million relating to the cost of manufacture at the time the Romanian order was negotiated—i.e., at November 1974 economic conditions. Further production may be authorised to meet demand beyond this latest batch of aircraft. The underwriting agreement provides for profits from further sales to be applied to the progressive reduction of any initial liability incurred by the Government until break even is reached, after which the profits will be shared between the Government and BAC. Actual payment by the Government would be made only if an overall loss remains when 1–11 production finally ceases in the absence of further orders.