THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022

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THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
THE IMPACT
OF AIRBUS
ON THE UK
ECONOMY
MARCH 2022
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

TABLE OF CONTENTS
                              Foreword2

                              Executive summary4

                              1. Introduction10
                                 1.1 Airbus in the UK                         10
                                 1.2 Motivation for the report                11

                              2.	The economic impact of Airbus in the UK16
                                 2.1 Direct impact                            16
                                 2.2 Indirect impact                          19
                                 2.3 Induced impact                          20
                                 2.4 Total impact                             22

                              3.	Airbus’ UK operations in 2021 and beyond26
                                 3.1 Airbus’ activity in the UK in 2021       26
                                 3.2 Looking to the future                    27
                                 3.3 Airbus’ recent investments in the UK     28

                              4. Airbus across the UK32
                                 4.1 Procurement and wage spending            32
                                 4.2 Economic impact across the UK           34

                              5.	The economic impact of Airbus’ divisions40
                                 5.1 Commercial Aircraft                     40
                                 5.2 Defence and Space                       42
                                 5.3 Helicopters                             44

                              6. Airbus’ catalytic impact48
                                 6.1 Research and development                48
                                 6.2 Upskilling                               52

                              7.	Impact of Airbus’ sustainability commitments58
                                 7.1 Social responsibility                    58
                                 7.2 Environmental responsibility            66

                              8. Conclusion72

                              Appendix: Methodology74

MARCH 2022                                                                      1
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

FOREWORD
Airbus pioneers sustainable aerospace for               Despite the headwinds we have faced in 2020
a safe and united world, helping to connect             and 2021, we are recovering from the demand
countries and communities across the globe.             shocks caused by COVID-19. Indeed our
While we are an international business, it is           continued investments throughout the crisis
vital that we never lose sight of the impact            have ensured we retain the critical knowledge
our activities have on the countries and                base required to fulfil our long-term strategic
communities in which we operate.                        objectives. Because of prudent management
                                                        the company is well placed to grow again.
Fundamental to our operations is the
relationship Airbus enjoys with its four home           Central to this recovery are our UK operations:
nations. The mutually beneficial nature of this         Our £250 million investment in 2021,
relationship is exemplified by this report about        purchasing the land our Filton and Broughton
our activities in the United Kingdom.                   sites operate on, demonstrates this. In 2022,
                                                        with the market revival ongoing, we remain a
The work by Oxford Economics shows that                 vital part of the UK’s economic, societal and
with more than 25 sites spread across the               environmental landscape.
country, spanning the Commercial Aircraft,
Defence, Space and Helicopter sectors, our              We are the largest civil aerospace company
presence in the UK contributes to the UK’s              in the country, the biggest civil aerospace
aerospace sector being the third largest in             exporter, Britain’s largest space company, the
Europe and fourth largest globally, building on         biggest supplier of large aircraft to the Royal
a proud 100-year British aviation heritage.             Air Force and responsible for around 50% of
                                                        the UK’s civil helicopter fleet.
The COVID-19 pandemic has had a severe
negative impact on the global economy with              Although our total contribution to UK GDP
companies around the world having to adapt to           fell as a result of the pandemic, we remained
significant levels of market volatility. In addition,   responsible for £5.6 billion of total economic
the aviation sector has been particularly hard          contribution to the UK in 2020, supporting
hit by travel restrictions put in place to combat       86,400 jobs across the country, many in
the virus, dealing a significant blow to our            economically deprived areas. We also pay our
customers and partners.                                 employees wages that are around 60% higher
                                                        than the national average. We are underwriting
As a result, our own business has had to adapt          our future through our links with dozens of UK
to the reduced demand for our products                  universities and research institutions, along with
and services by scaling back the size of                investing heavily in young people, employing
our workforce and our Commercial Aircraft               more than 1,100 apprentices during 2019 and
activity. However as this report clearly shows,         2020 alone.
the company did not pass on the full degree
of the financial impact of the pandemic to
our employees or the wider UK economy.
Furthermore our workforce adjustments in
the UK because of COVID-19 did not include
compulsory redundancies.

2
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

We are steadfast in our commitment to                  We recognise that high productivity, delivered
the UK, and we continue to invest in our               through sustainable business practices,
workforce, in research and development, and            investments in upskilling and efficient use of
in the technologies that give the UK strategic         capital, produces high quality and in-demand
advantage. We do all this while playing a vital        products that our global customers desire.
role in limiting human-made carbon emissions           Indeed in 2019 each Airbus employee generated
and providing advanced sustainable aviation            £155,000 in contributions to UK GDP. Our high
solutions that will benefit the entire planet.         productivity and balanced order backlogs
With our ZEROe programme we are proud                  continue to be catalysts for secure sustainable
to be the world’s first aerospace company              economic growth in the United Kingdom.
to pledge to put a zero emission aircraft into
commercial service by the mid-2030s and                We are proud of these achievements.
we continue to promote the acceleration of
sustainable aviation fuel (SAF) development,           Our strong and enduring relationship with
production, and consumption.                           the United Kingdom is a vital element in
                                                       Airbus’ ongoing success. We look forward to
It is important however to stress that numbers         continuing to deepen our ties over the years
only tell part of the story when it comes to           and decades to come.
Airbus’ relationship with the UK; nearly half of the
world’s air passengers fly on aircraft with wings
that were manufactured at our site in Broughton;
the A400M military transport aircraft played
a pivotal role in the evacuation of people from
Afghanistan thanks to the efforts of our UK-
based teams; and our helicopters are used by
the British Air Ambulance and Police Air Service,
saving lives day in, day out. Our success also         Guillaume Faury,
depends on our productivity and this resonates         Chief Executive Officer Airbus
with the core tenets of the UK’s Levelling Up plan,
the Plan for Growth, the National Space Strategy
and the Defence and Security Industrial Strategy.

Beyond our operations in aerospace, this
report illustrates the critical significance of our
exports in delivering on the UK’s Global Britain
ambitions. Our global operations and close
ties among our home nations means that in
2019, our £6.1 billion of UK exported products
translated into £1 in every £60 of goods               John Harrison,
exported from the UK.                                  General Counsel and UK Chairman Airbus

                                                                                                      3
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

      EXECUTIVE SUMMARY
                           Airbus is the world’s leading aerospace manufacturer. With over

86,400
                           125,000 employees, and having delivered more than 13,800
                           commercial jet aircraft to date—with more than 7,000 on order—
                           its significant contributions to the aviation industry are set to
                           continue.
Jobs supported
across the UK              The UK is classified as an Airbus home nation and plays an
in 2020. This              integral role in its global operations. With more than 25 sites
is compared to             spread across the country—spanning the Aerospace, Defence,
128,300 in 2019.           Security, and Space sectors—its presence in the UK contributes
                           to the UK’s aerospace sector being the third largest in Europe
                           and fourth largest globally.

                           This study investigates the impact of Airbus on the UK economy.
                           It considers Airbus’ own operations, the economic activity
                           supported by its procurement spending, and its payments to
                           employees. It then explores how this economic footprint creates
                           social value for communities across the country.

                           The COVID-19 pandemic created vast challenges for the aviation
                           industry. The number of global air passengers travelling in 2020
                           was 60% lower than in 2019, by far the greatest disruption the
                           industry has ever experienced. This had a substantial impact
                           on Airbus’ commercial aircraft business in 2020, forcing the
                           company to move quickly to reduce production levels by 40%
                           to reflect a drop in demand. We therefore present results for
                           Airbus’ contribution to the UK economy in 2020 and the pre-
                           pandemic, ‘normalised’ year of 2019.

                           A SUMMARY OF THE KEY FINDINGS OF THE REPORT

£1 in every £92
of goods exported
                           Airbus’ UK operations generate significant revenues. In 2019, the
                           company earned £6.8 billion in revenues, £5.5 billion of which
                           was generated by its Commercial Aircraft division, £1.1 billion
                           by its Defence and Space division, and in excess of £120 million
from the UK                from its Helicopters division. In 2020, reflecting the impact of the
were products              COVID-19 pandemic, Airbus generated £4.2 billion in revenues
manufactured by            from its UK operations. Airbus’ UK operations continued to earn
Airbus in 2020.            significant revenues in 2021, totalling £4.4 billion.
This compares to
                           The vast majority of this revenue is generated by exports. In 2019,
£1 in every £60 in 2019.   Airbus earned £6.1 billion in revenues (or 88% of total revenues)
                           from customers overseas—a significant contribution to the UK’s
                           balance of payments. In fact, £1 in every £60 earned by UK firms
                           from goods exported were products manufactured by Airbus.

      4
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

Airbus supports a sizeable contribution to UK GDP. We estimate

                                                                       £5.6 billion
that Airbus supported a total contribution of £9.3 billion in 2019.
This is the sum of three channels of impact. Some £2.0 billion
was generated by the company itself—its direct impact. Airbus’
sizeable procurement spending with UK suppliers stimulated
a further £4.4 billion contribution to GDP—its indirect impact.        Total contribution
And the payment of wages by Airbus, and the firms in its supply        to UK GDP
chain, supported a further £3.0 billion contribution to GDP—its        supported by
induced impact.                                                        Airbus in 2020.
                                                                       This compares to
In 2020, Airbus’ total contribution to UK GDP declined to
                                                                       £9.3 billion 2019.
£5.6 billion in the wake of COVID-19. The contribution it
generated itself was £0.5 billion, as profits were impacted
by the COVID-19 pandemic. Its indirect impact supported a
£2.9 billion contribution to GDP, lower than the previous year
owing to reduced procurement spending. The wage-induced
spending attributable to Airbus supported a further £2.1 billion
contribution to GDP.

Airbus supported 128,300 jobs across the country in 2019. The
company directly employed 12,600 people at more than 25 sites
sites across the country. A further 73,800 jobs were supported
along its UK supply chain by its procurement spend. The wage-
induced spending of its employees and those employed in its
supply chain sustained a further 41,800 jobs.

In 2020, the number of jobs Airbus is estimated to have supported
fell to 86,400. The company’s own employment remained fairly
stable at 12,100 employees, but a decline in its procurement
reduced the supply chain jobs to 45,900, with a further 28,400
jobs sustained through wage-induced spending. Airbus’ direct
employment fell to 10,800 in 2021, in response to the COVID-19
pandemic—without the need for compulsory redundancies.

Airbus employees are highly productive. In 2019, the average

                                                                       2.5 times
gross value added per head produced by Airbus workers was
£155,000. This was 2.5 times the national average, and 1.5 times
the air and space manufacturing average. Owing to the impacts
of the COVID-19 pandemic, the average gross value added per
head produced by Airbus workers was £44,400 in 2020.                   Airbus employees
                                                                       were 2.5 times
The Commercial Aircraft division was most impacted by the              more productive
COVID-19 pandemic. Its total contribution to UK GDP was £7.5           than the national
billion in 2019, and £3.7 billion in 2020. The Defence and Space       average in 2019.
division increased its total contribution to the UK economy,
rising from £1.6 billion in 2019, to £1.7 billion in 2020. Similarly
stable, the Helicopters division contributed £212 million to UK
GDP in 2019, and £210 million in 2020.

                                                                                            5
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

                                         This economic impact is spread across the UK. Airbus supports

45%
                                         thousands of jobs in each of the UK’s nations and regions. Most
                                         jobs were supported in the East Midlands—where Airbus spends
                                         the largest share of its procurement (45% in 2019)—with 21,000
                                         jobs. Some 18,500 jobs were supported in the South West, and
The share of                             14,300 across Wales.
Airbus’ procurement
spending in the                          Airbus contributes to the levelling up agenda by spending a
10% most deprived                        disproportionate amount in deprived areas. Some 45% of its UK
local authorities.                       procurement (£2.6 billion) in 2019 was with suppliers based in the
                                         10% most deprived local authorities as identified by the Index of
                                         Multiple Deprivation. More than half of Airbus’ procurement is with
                                         businesses in local authorities identified as high priority areas for
                                         the Government’s Levelling Up Fund.

                                         Airbus supports local communities by paying high wages to
                                         its employees across the country. The wages it pays are on
                                         average 60% higher than the national average. In 98% of the
                                         parliamentary constituencies in which its employees reside,
                                         Airbus pays above the constituency average.

                                         Airbus has a wide impact on the UK by enhancing its productive
                                         potential. It invested £352 million in research and development
                                         in 2019, and £295 million in 2020, equivalent to 5.2% and 7.1% of
                                         its revenue in each year, respectively. There is vast collaboration
                                         involved in this: the company works closely on projects with the
                                         £3.9 billion Aerospace Technology Institute (ATI), dozens of UK
                                         universities, and other research institutions.

                600
                                         Airbus is investing in the skills of the UK workforce. In 2019 and
                                         2020 it had 532 and 576 apprentices, respectively, across its
                                         sites. This is a significant investment in the upskilling of young
Nearly                                   adults, especially given the nationwide decline in apprenticeships
                                         in 2020. Around one-in-four apprentices in the Flintshire local
The average                              authority, work and train at Airbus’ Broughton site.
number of
apprentices at                           Finally, the global aviation industry produces around 2% of all
Airbus in 2020.                          human-induced CO2 emissions.1 Airbus is addressing this with UK
                                         research and development projects, which form a major part of its
                                         global decarbonisation plans. Its research into sustainable aviation
                                         fuels is centred in the UK. From its site in Filton near Bristol, it is
                                         establishing how more environmentally friendly fuel systems can
                                         be rolled out across the industry; this includes partnering with
                                         universities and building new learning platforms for hydrogen
                                         fuels. At its Filton and Broughton sites, Airbus is also exploring
                                         how future wings can further improve efficiency and reduce
                                         emissions both through the build process and in operations via its
                                         Wing of Tomorrow programme, the company’s largest ongoing
                                         research and development project.

      6
           1
               ATAG, ‘Facts & figures’
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

                                         7
THE IMPACT OF AIRBUS ON THE UK ECONOMY - MARCH 2022
The impact of Airbus on the UK Economy

THE ECONOMIC IMPACT
OF AIRBUS IN THE UK
    TOTAL ECONOMIC IMPACT                                         2019           2020

    Contribution to GDP                 UK jobs supported                  Tax revenues

       £9.3 bn                        128,300                           £2.0 bn
       £5.6 bn                         86,400                           £1.4 bn

                 Every £1 in gross value added                      £1 in every £400 collected
                 generated in 2019, supported a                     by HMRC was attributable to
                 further £3.80 in the UK economy.                   Airbus activity in 2020.

    PRODUCTIVITY                                               UK REVENUE
               £155,000 average gross value added                     £6.8 bn earned in 2019
               employee contribution to GDP in 2019,                       £4.2 bn earned
               2.5 times the national average.                             in 2020

    UK SPENDING                                                     EXPORTS
    £5.8 billion spent with UK suppliers
    in 2019, compared to £3.8 billion
    in 2020.

    3 in 10 of Airbus’ UK suppliers                                  88% of its UK revenue
    are SMEs.
                                                                     was earned from exports
    45% of Airbus’ procurement in 2019 was                           in 2019, and 82% in 2020.
    in the 10% most deprived local authorities.
                                                                    £1 in every £60 of goods
    In 2020, the average wage paid by Airbus                        exported from the UK in
    was 1.6 times the national average.                             2019 were Airbus products.

8
The impact of Airbus on the UK Economy

AIRBUS’ UK OPERATIONS IN 2021 AND BEYOND
        14% growth               7,000 outstanding
        in revenues              commercial
        in 2021.                 aircraft orders.

THE ECONOMIC IMPACT OF AIRBUS’ DIVISIONS
    Commercial                      Defence
                                                         Helicopters
    Aircraft                        and space

    £7.5 billion GDP                £1.6 billion GDP     £212 million GDP
    £3.7 billion GDP                £1.7 billion GDP     £210 million GDP
    104,800 jobs                    20,400 jobs          3,200 jobs
    64,200 jobs                     18,700 jobs          2,900 jobs
    £1.7 billion tax                £320 million tax     £33 million tax
    £1.1 billion tax                £330 million tax     £29 million tax

CATALYTIC IMPACT AND SUSTAINABILITY
         £352 million spent on UK R&D in 2019,         Developing zero-
         £295 million in 2020.                         emission commercial
                                                       aircraft by 2035.
         5.2% of Airbus’ revenue invested in R&D
         in 2019, compared to 7.1% in 2020.
                                                       400 tonnes of CO2
                                                       emissions saved in
         £129,000 spent on each of Airbus’             three months by
         576 apprentices in 2020.
                                                       Broughton Beluga
                                                       flights using 35% SAF.
         187,000 interactions with young
         people at Broughton and Filton sites.
                                                       All Airbus commercial
                                                       aircraft and helicopters
         13,000 ventilators produced by 700            are certified to fly with
         Airbus employees in three months.             50% SAF.

                                                                                   9
The impact of Airbus on the UK Economy

1. INTRODUCTION
Airbus is a global leader in                   1.1 AIRBUS IN THE UK
the aerospace industry. It is
among the largest aerospace                    Airbus is a multinational                          division. It is the biggest
companies in the world, with                   company, operating in 180                          supplier of large aircraft to
over 125,000 employees,                        locations around the world. The                    the Royal Air Force. The
and more than 12,000 direct                    UK is however an Airbus home                       A400M Atlas and A330 MRTT
suppliers globally. Its aircraft               nation and plays an integral                       Voyager aircraft, supported
are flown across the world,                    role in its operations.3 Each                      directly by Airbus’ Defence
with orders increasing six-fold                Airbus division—Commercial                         and Space division and
since 2000. Indeed, Airbus                     Aircraft, Defence and Space,                       the Airbus led consortium
has delivered over 13,800                      Helicopters—has activities in                      AirTanker, respectively,
commercial jet aircraft to                     the UK, with more than 25 sites                    provide the backbone of the
more than 450 customers,                       spread across the country. Its                     country’s tactical and strategic
with a further 7,000 aircraft                  presence in the UK contributes                     airlifting capabilities and
on order.2 Owing to the                        to the UK’s aerospace sector                       Air-to-Air Refuelling (AAR)
popularity of Airbus’ latest                   being the third largest in                         capabilities.7 The company
generation of aircraft, which                  Europe and fourth largest                          has owned and operated the
benefit from significant                       globally.4 The strong ties                         UK’s secure military satellite
reductions in fuel burn and                    to Airbus’ multinational                           communications fleet for
emissions when compared to                     operations in Europe and                           more than 18 years, provided
previous generation aircraft,                  beyond are in keeping with the                     more than 250 satellite
its significant contribution to                Government’s Global Britain                        communication (SatCom)
the aviation industry is set                   international ambitions.5                          terminals to the Ministry of
to continue.                                                                                      Defence, and delivers the UK’s
                                               Airbus is the largest commercial                   Defence fixed network and in
                                               aircraft company in the UK                         theatre-networks, with more
                                               and its biggest civil aerospace                    than 130 military campaign
                                               exporter. The majority of wings                    medals awarded to Airbus
                                               fitted to Airbus’ commercial                       employees, in recognition
                                               aircraft are engineered and built                  of their support to the front
                                               in the UK. Indeed, nearly half                     line. Airbus’ Cyber Security
                                               of the world’s air passengers                      business, based in Newport
                                               fly on Airbus wings designed                       in South Wales, protects the
                                               in the South West (Filton) and                     Ministry of Defence’s vast
                                               manufactured in North Wales                        secure communications
                                               (Broughton).                                       network at home and overseas.
                                                                                                  It also delivers NATO’s
                                               However, Airbus’ footprint in                      Deployable Communication
                                               the UK extends far beyond its                      and Information System, and
                                               commercial aircraft. It is also                    is one of a small number of
                                               Britain’s largest space company,                   sovereign suppliers for high-
                                               with operations spread across                      grade cryptography.
                                               the UK—it has worked on
                                               missions including the ExoMars                     In addition, the company also
                                               rover and the Solar Orbiter.6                      represents around 50% of
                                                                                                  the UK’s civil helicopter fleet,
                                               Airbus contributes to the UK’s                     providing aircraft and support
                                               National Security Objectives                       to the Air Ambulance, Police Air
                                               with its sizeable Defence                          Service, and Ministry of Defence.

     2
       Airbus, ‘Orders and deliveries - Commercial Aircraft’
     3
       Airbus defines its home nations as France, Germany, Spain and the UK
10   4
       Airbus Defence and Space Group statistics
     5
       HM Government, (2019), ‘Global Britain: delivering on our international ambition’
     6
       Airbus (2016), ‘ExoMars - The heat is on!’; Airbus (2020), ‘Solar Orbiter is ready for its close-up with the Sun’
     7
       Airbus, ‘Airbus in the United Kingdom’
The impact of Airbus on the UK Economy

1.2 MOTIVATION FOR THE REPORT

The COVID-19 pandemic                             With an economic footprint                     •   Chapter 3 provides an early
created vast challenges for the                   spread across the UK, Airbus                       indication of the revenue
aviation industry. The number                     supports societal goals. As                        earned and employment
of global air passengers                          such we address the wider                          for Airbus’ UK operations in
travelling in 2020 was 60%                        impact of Airbus’ footprint on                     2021. We then consider how
lower than the previous year.8                    UK society. This includes its                      the company’s economic
This had a major impact                           contribution to the upskilling                     impact will evolve, including
on the demand for new                             of young people across the                         with its recent investments.
aircraft and businesses like                      country, the advancement
Airbus which manufacture                          of innovative disruptive                       •   Chapter 4 outlines Airbus’
                                                                                                     impact in communities
them. With that in mind, this                     technologies with its
                                                                                                     across the UK, considering
report seeks to provide a                         research programmes, and its
                                                                                                     how its activities are
comprehensive assessment of                       integration within many local
                                                                                                     supporting the ‘levelling up’
Airbus’ contribution to the UK                    communities and universities.
                                                                                                     of the UK economy.
in a ‘normal year’, 2019, and
investigates what happened                        This report also captures                      •   Chapter 5 investigates the
in the year of the pandemic,                      Airbus’ environmental                              separate contributions to
2020. We also look to present                     impact in the UK. It                               the UK economy of Airbus’
early indication of Airbus’                       considers two aspects: how                         divisions—Commercial
operations in the year 2021.                      Airbus is managing the                             Aircraft, Defence and Space,
                                                  environmental footprint                            and Helicopters.
Airbus has a global supply                        of industrial operations;
chain, it stimulates economic                     and how its product                            •   Chapter 6 analyses
                                                                                                     how Airbus boosts the
activity around the world. This                   development is contributing
                                                                                                     productive potential of the
study uses a global model                         to the decarbonisation of the
                                                                                                     UK economy through its
to estimate the impact of                         industry.
                                                                                                     R&D and upskilling of staff.
the company’s spending and
how it feeds back into the                        The report is structured as                    •   Chapter 7 assesses the
UK economy.                                       follows:                                           impacts of the company’s
                                                                                                     social and environmental
With a sizeable presence in                       •   Chapter 2 explores the
                                                                                                     sustainability commitments
                                                      economic contribution
communities throughout the                                                                           in the UK.
                                                      Airbus made to the UK
UK, Airbus’ impact reaches
all of the UK’s nations and
                                                      economy in 2019 and                        •   Chapter 8 concludes our
                                                      2020, through the GDP,                         findings.
regions. To explore how Airbus
                                                      employment, and tax
is contributing to these local
                                                      revenues it supported.
areas and the ‘levelling up’
agenda across the UK, the
impact analysis herein have
been undertaken at this
local level.

8
    ICAO, (2022), ‘Effects of Novel Coronavirus (COVID-19) on Civil Aviation: Economic Impact Analysis                              11
The impact of Airbus on the UK Economy

     INTRODUCTION TO ECONOMIC IMPACT ANALYSIS

     This report analyses Airbus’ economic impact        We analyse these channels of impact using
     across three core channels. These are the:          three core metrics:
     • Direct impact, which is the economic              • Employment (measured on a headcount
       activity that Airbus itself generates at its        basis);
       UK facilities;
                                                         • Gross value added contribution to UK
     • Indirect impact, or supply chain impact,            GDP; and,
       that occurs because Airbus buys inputs of
                                                         • Tax receipts generated by the UK activity
       goods and services from UK businesses,
                                                           and employment supported by Airbus.
       and Airbus’ international suppliers (or
       businesses in their supply chain) buy
                                                         While most economic impact studies assess
       inputs of goods and services from UK
                                                         these effects based only on spending that
       businesses;
                                                         occurs within the country of interest, this
     • Induced impact, or wage-financed                  report goes further, to assess the impact
       spending impact, which is the economic            of Airbus’ global activities. This is a more
       activity stimulated from both Airbus              comprehensive approach that is suited
       and Airbus’ suppliers’ wage payments to           to companies with a global footprint, like
       employees.                                        Airbus. A detailed methodology discussion is
                                                         in the appendix to this report.

     Fig. 1: Illustrating the channels of economic impact

       DIRECT                                         Airbus employs lots of staff. Its operations generate
       IMPACT                                         GDP and tax for the authorities.

                                                                         It also spends money with
      INDIRECT                                                           suppliers who employ staff,
       IMPACT                                                            generate GDP and pay taxes.
                                                                         They use other suppliers in turn.

                                                                               Employees (including of the
                                                                               suppliers) spend their
      INDUCED                                                                  wages in the wider
       IMPACT
                                                                               economy, generating more
                                                                               GDP, jobs and tax revenues.

                                                                               Added together, these three
        TOTAL                                                                  effects—direct, indirect,
       IMPACT                                                                  induced—comprise the total
                                                                               economic impact of Airbus.

12
The impact of Airbus on the UK Economy

      GLOSSARY                                                     AIRBUS DIVISIONS

      Direct impact: The impact of Airbus at its                   Airbus is not a single entity, but rather a
      operational sites in the UK.                                 collection of companies across the world
                                                                   operating under the Airbus umbrella.
      Employment: The number of employees and                      Included in this study are those located
      self-employed.                                               in the UK: Airbus Operations, Airbus
                                                                   Defence and Space, Airbus Helicopters
      Gross Domestic Product (GDP): The most                       UK, Surrey Satellite Technology Limited
      commonly used metric to assess the health                    (SSTL), NavBlue. Airbus also owns 29.5%
      of the UK economy. It is often used to                       of AirTanker Services Limited and 46.1%
      determine if the economy has entered or                      of AirTanker Limited. In compiling the
      exited a recession. It is equal to the gross                 aggregate results, we consider only the
      value added of all firms in the UK economy,                  Airbus’ share of these companies’ total
      after minor adjustments for taxes and                        impact, factoring in the change in ownership
      subsidies.                                                   structure that occurred in November 2020.

      Gross Value Added (GVA): The value a                         Fig. 2: Airbus’ divisions in this report
      company generates through its activities.
      It equates to a company’s revenue minus                        Commercial     Defence and      Helicopters
      the cost of bought-in goods and services                         Aircraft        Space
      used up in the production of that revenue.
                                                                      Airbus       Airbus Defence      Airbus
      The sum of gross value added across all
                                                                     Operations      and Space       Helicopters
      companies in an economy is equal to GDP,
      after minor adjustments for taxes and                            NavBlue          SSTL
      subsidies.
                                                                                     AirTanker
                                                                                   (Airbus’ share)
      Indirect impact: Economic activity stimulated
      by Airbus’ purchases of inputs of goods and
      services from its supply chain.                              This report excludes MBDA—a joint
                                                                   venture between Airbus, Leonardo, and
      Induced impact: Economic activity                            BAE Systems. Airbus owns 37.5% of the
      stimulated by Airbus and Airbus’ suppliers’                  business. Its UK division, based in Stevenage,
      wage payments to employees.                                  employed 3,987 people in 2020 and earned
                                                                   revenues of £930 million.9
      Procurement: The spending on inputs of
      goods and services with Airbus’ suppliers
      around the world.

      Productivity: A measure of value added
      produced in a given period of time, per unit
      of labour input—such as value added per job
      per annum (as in this report).

9
    MBDA UK Limited 2020 Statutory Accounts published with Companies House.                                         13
The impact of Airbus on the UK Economy

14
The impact of Airbus on the UK Economy

                                         15
The impact of Airbus on the UK Economy

      2. T
          HE ECONOMIC IMPACT OF
         AIRBUS IN THE UK
      Airbus has an economic                         2.1 DIRECT IMPACT
      footprint that is realised across
      the UK. It employs over 12,000                 Airbus in the UK earned £6.8                  The company makes a
      people at more than 25 sites—                  billion in revenues in 2019.                  significant contribution to the
      designing, manufacturing,                      The majority was generated                    UK’s exports. In 2019, it earned
      and delivering its portfolio of                by its Commercial Aircraft                    £6.1 billion (or 88% of total
      products around the world.                     division, at £5.5 billion; with its           revenues) from customers
      Below we quantify Airbus’                      Defence and Space division                    overseas (Fig. 3). This means
      full economic footprint in the                 generating £1.1 billion; and                  that £1 in every £60 earned
      UK in terms of its gross value                 the Helicopters division                      by UK firms, from goods
      added contribution to GDP, the                 generating £122 million. In                   exported, were products
      employment it supports, and                    2020, the sharp decline in                    manufactured by Airbus.10 This
      the tax revenues it generates.                 air passenger travel due to                   is a considerable contribution
                                                     the COVID-19 pandemic and                     to the UK Government’s
      In this chapter, we explore                    associated travel restrictions,               strategy of increasing the
      each channel of Airbus’ impact                 adversely impacted the airline                share of GDP consisting of
      on the UK, starting with the                   industry and the demand for                   exports from 30% to 35%.11
      direct contribution of its own                 new aircraft. This, plus the
      operations. After this we                      need for social distancing                    In 2020, Airbus exported
      consider two further channels                  measures and the resulting                    £3.4 billion worth of
      of impact; the purchases                       limited production levels,                    goods—82% of its revenues.
      Airbus makes from its suppliers                resulted in Airbus’ UK revenue                Such business cultivates
      stimulating further economic                   falling to £4.2 billion in 2020—              international relationships
      activity across the country (its               this includes £2.9 billion in                 and contributes to the
      indirect impact); and the wages                revenues from Commercial                      Government’s Global Britain
      paid to its employees—and                      Aircraft, £1.0 billion from the               ambitions.
      those employed in its supply                   Defence and Space division,
      chain—funding consumer                         and £184 million from the
      spending and delivering                        Helicopters division.
      additional economic benefits to
      the UK (its induced impact).                   Fig. 3: Airbus’ UK exports by customer location
                                                      Americas                                      Americas
                                                                                Other                                       Other

£4.2 billion
                                                            1%                                            1%
                                                      Asia                      0%                  Asia                    0%
                                                       2%                                            2%
                                                                UK
                                                               12%                                           UK
Airbus earned £4.2 billion in                                                                               18%
revenue in 2020. This compares
to £6.8 billion in 2019.                                               2019                                          2020

                                                                                                                             Europe
                                                                              Europe                                          79%
                                                                               86%

                                                     Source: Airbus

           10
                HMRC, (2020), 'UK Overseas Trade in Goods Statistics - Summary of 2019 Trade in Goods'
      16   11
                HM Government, (2018), 'Export Strategy: supporting and connecting businesses to grow on the world stage'
The impact of Airbus on the UK Economy

Airbus directly generated                        Airbus employed 12,621 people,                  employment fell to 10,800 in
a gross value added                              on average, across the UK in                    2021 as part of the company’s
contribution to UK GDP of                        2019. That is equivalent to 14%                 response to the initial impacts
£2.0 billion in 2019. This is                    of the total employment of the                  COVID-19 had on the aviation
a measurement of the value                       air and space manufacturing                     industry (without resorting to
added created by Airbus for                      sector that year. The majority                  compulsory redundancy).
the UK economy, calculated as                    of Airbus’ employment was
the sum of its UK profits and                    at its Commercial Aircraft                      The jobs at Airbus span a
wage payments. In 2019, its UK                   Broughton site in North                         variety of disciplines. Most
profits were over £1.1 billion and               Wales (44%), followed by its                    are in manufacturing and
the compensation paid to UK                      Commercial Aircraft Filton site                 engineering roles (37% each
employees was £830 million.                      near Bristol (22%), the Defence                 in 2020), with a further 24%
This is a significant contribution               and Space site in Stevenage                     in administration roles (Fig.
to the UK economy—equivalent                     (10%), and the Defence and                      4). More than two-thirds of
to 31% of the total gross value                  Space site in Portsmouth                        Airbus’ UK jobs are in the civil
added generated by the air and                   (8%). The remaining roles                       domain (68%), while 26% are
space manufacturing sector                       were spread across more                         in defence, and the remaining
(SIC 30.3) that year.12                          than 20 further sites across                    5% are dual-use.
                                                 the country. In 2020, Airbus
As the COVID-19 pandemic                         employed on average 12,134

                                                                                                    82%
impacted the aviation industry                   people across the UK. The
in 2020, the company made                        fall in its employment versus
a UK net loss of £260 million.                   the previous year was 4%,
However, it still paid £799                      significantly smaller than the
million in wages to employees                    contraction in its contribution                    of its revenue was earned from
across the UK. Its own                           to GDP, as Airbus retained                         exports in 2020. This compares
contribution to UK GDP was                       the majority of its skills                         to 88% in 2019.
therefore £539 million in 2020.                  base in 2020. Airbus’ direct

Fig. 4: Airbus’ direct employment in the UK
      Manufacturing             Engineering              Administration               Other
Employees
14,000
                          12,621            2%
                                                                    12,134            1%
12,000
                            23%
                                                                      24%
10,000

 8,000
                            37%                                       37%
 6,000

 4,000

                            38%                                       37%
     2,000

        0
                            2019                                     2020
Source: Airbus                                         Figures may not sum due to rounding

12
  Office for National Statistics (ONS), (2021), ‘Annual Business Survey - 2019 Results. The ONS use the Standard industrial
classification of economic activities (SIC) to define industries.’                                                              17
The impact of Airbus on the UK Economy

       Fig. 5: Airbus workers’ gross value added per job versus national averages in 2019
       Gross value added per job (£)
       160,000

                                                                                                                                    155,000
       140,000

       120,000

       100,000
                                                                                                 103,800
       80,000

       60,000                                                   66,900
                             61,500
       40,000

        20,000

               0
                        UK - average                   UK manufacturing -              UK air and spacecraft                         Airbus
                                                           average                     manufacturing (30.3) -
       Source: Airbus, ONS                                                                    average

                                                        Airbus employees are highly                        average Gross Value Added

£155,000
                                                        productive. The average Gross                      per head produced by Airbus
                                                        Value Added per head—a                             workers was £44,400 in 2020.
                                                        measure of productivity—of
                                                        Airbus workers in the UK was                       Airbus and its employees paid
average gross value added
                                                        £155,000 in 2019. This is 2.5                      £203 million in taxes to the UK
contribution to GDP by each of                          times the national average,                        Exchequer in 2019, and £159
Airbus’ employees in 2019.                              and 1.5 times the air and                          million in 2020. This includes
This is 2.5 times the national                          space manufacturing sector                         £214 million in labour taxes in
productivity average.                                   average (Fig. 5).13 Having                         2019, and £219 million in 2020.
                                                        high productivity workers is                       Net receipts of R&D relief are
                                                        important because it boosts                        deducted from the total, along
                                                        the price competitiveness of                       with furlough contributions
                                                        UK products and the standard                       claimed in 2020, while VAT
                                                        of living for the UK’s residents.                  payments are not included.
                                                        This also helps to address                         This is a notable contribution
                                                        the UK’s historic productivity                     to the UK Exchequer—these
                                                        gap with the other six G7                          payments are each sufficient in
                                                        economies.14 One of the main                       size to fund, for instance, both
                                                        aims of the Government’s                           the Government’s Build Back
                                                        Defence and Security                               Greener (£160 million) and the
                                                        Industrial Strategy (DSIS) is to                   UK Community Renewal Fund
                                                        “strengthen the productivity                       (£220 million) projects.16
                                                        and resilience of the defence
                                                        and security sectors”.15
                                                        Following the impacts of
                                                        the COVID-19 pandemic, the

             13
                The gross value added per worker averages are calculated using ONS data on total gross value added (GDP output approach –
             low-level aggregates data set) and total employment (Labour Force Survey).
       18    14
                ONS, (2022) ‘International comparisons of UK productivity (ICP), final estimates: 2020’
             15
                HM Government, (2021), ‘Defence and Security Industrial Strategy: A strategic approach to the UK’s defence and security industrial sectors’
             16
                HM Government, (2020), ‘New plans to make UK world leader in green energy’; Department for Levelling Up, Housing and
             Communities (2020), ‘UK Community Renewal Fund: prospectus’
The impact of Airbus on the UK Economy

2.2 INDIRECT IMPACT

Airbus has a broad and diverse       We estimate Airbus’ global                The activity supported along
supply chain that spans the          procurement stimulated a                  Airbus’ supply chain also
world. UK businesses are             £4.4 billion gross value added            contributes tax revenues to the
important suppliers to Airbus’       contribution to UK GDP, along             UK government. Businesses
operations both in the UK and        its UK supply chain in 2019.              in its supply chain pay
globally. Airbus’ purchases          Owing to the fall in Airbus’              corporation tax and other taxes
of goods and services from           procurement, the equivalent               on production and products.
UK businesses stimulate              figure was £2.9 billion in 2020.          Equally, the people employed
economic activity throughout                                                   in these businesses pay income
the economy.                         This economic activity is                 tax and National Insurance
                                     estimated to have supported               Contributions. Considering all
Airbus spends billions of            73,800 jobs with UK suppliers             of these taxes, we estimate
pounds with UK businesses            in 2019. Considering the                  that Airbus’ UK supply chain
each year. In 2019, Airbus spent     sectors in which these jobs               activities raised almost £1.0
£5.8 billion on inputs of goods      were supported, 26,200                    billion for the Exchequer in
and services with more than          (or 35% of the total) were                2019, and £670 million in 2020.
3,300 UK suppliers. This was         in the transport equipment

                                                                                 £3.8 billion
12% of its global procurement        manufacturing sector; a
spend (Fig. 6). With the             further 11,900 jobs were
COVID-19 pandemic impacting          supported in the business
the demand for commercial            services sector; with 6,800
aircraft in 2020, this figure fell   jobs sustained in the wholesale
to £3.8 billion with 2,900 UK        and retail trade sector (Fig. 7).           spent with UK suppliers in 2020.
suppliers. Included in Airbus’       In 2020, we estimate 45,900                 In 2019, Airbus spent £5.8 billion
supply chain are hundreds            jobs were supported along                   with UK suppliers.
of small- and medium-sized           Airbus’ UK supply chain.
businesses (SMEs). Indeed,
nearly three-in-10 of Airbus’
direct UK suppliers are SMEs.

                                                                                 3 in 10
Fig. 6: Airbus’ procurement of goods and services
£ billion
60
                                      Rest of the World             UK
                  49.6
50                                                                               of Airbus’ UK suppliers are SMEs.
                 5.8 (12%)
40                                                  36.0
                                                  3.8 (11%)
30
                  43.8
20
                                                     32.3
10

 0
                   2019                             2020
Source: Airbus                           Figures may not sum due to rounding

                                                                                                            19
The impact of Airbus on the UK Economy

      Fig. 7: Airbus’ indirect employment supported by sector in 201917
             Transport equipment
                                                                                                                  26.2
              manufacturing (30)
                    Business services
                             (69-82)                                           11.9

       Wholesale and retail trade
                                                              6.8
                        (45-47)
       Machinery and equipment
                                                          5.8
                           (28)
      Transportation and storage
                                                2.6
                         (49-53)
             Computer, electronic
                                               1.9
                and optical (26)
                   Financial activities
                                        1.6
                              (64-66)
                     Fabricated metal
                                      1.6
                        products (25)
                             IT services
                                         1.5
                                (63-63)
                          Construction
                                       1.5
                               (41-43)
              Accomodation and
                                  1.2
            food services (55-56)

                                   Other                                     11.2

                                           0                5                10           15           20          25           30
      Source: Oxford Economics                                                        Thousands

                                                        2.3 INDUCED IMPACT

1.6 times
In 2020, the average wage paid
                                                        The wage-financed spending of
                                                        those employed by Airbus, or in
                                                        its supply chain, form a further
                                                        channel through which it
                                                                                                  Airbus pays high wages to
                                                                                                  its employees relative to
                                                                                                  those available in the whole
                                                                                                  economy. The average wage it
by Airbus was 1.6 times the                             contributes to the UK economy.            paid in the UK in 2020 was 1.6
national average.                                       Employees make purchases                  times the national average.18 In
                                                        at retail, leisure and other              each of the UK’s nations and
                                                        outlets throughout the country;           regions in which its employees
                                                        these purchases stimulate                 reside, the average wage it
                                                        further activity, adding value,           paid was at least one-quarter
                                                        sustaining employment, and                higher than the region’s
                                                        raising tax revenues.                     average—supporting further
                                                                                                  wage-induced activity in the
                                                                                                  consumer economy (Fig. 8).

            17
                 Numbers are the relevant SIC code definitions for the industries.
      20    18
                 ONS, (2020), 'Employee earnings in the UK: 2020'
The impact of Airbus on the UK Economy

Fig. 8: Average annual gross pay in 2020
£
60,000
                                     Median resident salary                Average Airbus salary

50,000

40,000

30,000

20,000

10,000

       0
             st

                           t

                                          s

                                                        s

                                                                  d

                                                                           on

                                                                                      st

                                                                                                   t

                                                                                                           es

                                                                                                                       om
                           es

                                                                                                 es
                                      nd

                                                   nd

                                                                 an
           Ea

                                                                                     Ea

                                                                                                        al
                                                                       nd
                       W

                                                                                               W

                                                                                                                    gd
                                     la

                                                   la

                                                                 gl

                                                                                                       W
        th

                                                                                 h
                                                                      Lo
                                 id

                                                id

                                                             En
                      th

                                                                                             h

                                                                                                                  in
                                                                                 ut
      or

                                                                                           ut
                                 M

                                              tM

                                                                                                                K
                  or

                                                                                So
                                                            of
    N

                                                                                          So
                                st

                                                                                                                d
                  N

                                           es

                                                                                                             te
                            Ea

                                                        st
                                          W

                                                                                                           ni
                                                     Ea

Source: Airbus, ONS
                                                                                                           U

We estimate that wage-                          We estimate that this same                The wage-financed spending
financed spending attributable                  wage-financed spending                    of those employed by
to Airbus supported a                           supported a £2.1 billion value            Airbus and in its supply-
£3.0 billion value added                        added contribution to UK GDP              chain supports a further
contribution to UK GDP in                       in 2020, sustaining 28,400                tax contribution to the UK
2019, sustaining a further                      UK jobs. The majority of this             Exchequer. In 2019, these tax
41,800 UK jobs in that year.                    difference can be explained by            revenues were an estimated
Most roles were supported in                    the fall in the number of roles           £830 million, and over £600
the health and social sector                    supported in Airbus’ UK supply            million in 2020.
(8,300 jobs, or 25% of the                      chain, an effect of Airbus’
total) and the wholesale and                    reduction in procurement
retail trade sector (8,000, or                  spending for 2020.
24% of the total).

                                                                                                                            21
The impact of Airbus on the UK Economy

       2.4 TOTAL IMPACT

       This chapter has shown                          In 2020, Airbus’ gross value                   The activity and employment
       how Airbus’ impact on the                       added contribution to UK GDP                   supported by Airbus generated
       UK extends far beyond                           was £5.6 billion. This total was               significant tax revenues for the
       the operations at its own                       affected by both the fall in                   UK Exchequer. We estimate
       facilities. Its total economic                  profitability impacting Airbus’                Airbus’ operations raised
       footprint in the UK is the                      direct gross value added                       more than £2.0 billion in tax
       sum of the aforementioned                       contribution, and the impact                   revenues in 2019, with the
       direct, indirect, and induced                   of reduced procurement                         majority raised along its UK
       impacts. By combining these                     spending on the indirect and                   supply chain and by the wage-
       three channels of impact, we                    induced channels.                              induced spending it sustains. To
       estimate Airbus supported a                                                                    place this number in context,
       £9.3 billion contribution to UK                 Airbus supported 128,300                       this means £1 in every £310
       GDP in 2019, with a gross value                 jobs across the UK in 2019, a                  collected by HMRC in 2019
       added multiplier estimated to                   figure greater than the total                  can be attributed to Airbus’
       be 4.8 (Fig. 9). This means for                 employment of Portsmouth                       activity.19 Put another way, this
       every £1 in gross value added                   or York. The company itself                    total could be used to fund 42%
       generated by the company                        employed nearly 13,000                         of the Government’s Levelling
       itself, it supported a further                  people across the UK (10%                      Up Fund, or the Catch-up
       £3.80 around the rest of the                    of the total). Mirroring the                   education programme twice-
       UK economy through its                          case with its contribution to                  over.20 In 2020, we estimate
       expenditure. Owing to the                       GDP, Airbus supported the                      Airbus supported more
       extensive and sizeable nature                   greatest number of people                      than £1.4 billion in total tax
       of Airbus’ UK supply chain, the                 through its procurement: an                    payments, meaning £1 in every
       indirect channel accounted                      estimated 73,800 jobs with UK                  £400 collected by HMRC in
       for nearly half (47%) of this                   suppliers, or 58% of the total                 2020 can again be attributed to
       contribution (Fig. 9). To put                   (Fig. 10). Finally, Airbus and                 Airbus’ activity.
       these numbers into context,                     its suppliers’ wage payments
       Airbus’ total contribution to                   supported 41,800 UK jobs
       GDP was similar in size to                      (33% the total).
       that produced by the city of
       Southampton.                                    We estimate Airbus’ activities
                                                       sustained 86,400 jobs across
                                                       the country in 2020. Its

£5.6 billion
                                                       direct employment in the UK
                                                       decreased slightly to above
                                                       12,000, with the majority
                                                       of the decline being in jobs
In 2020, Airbus supported a                            supported along its UK supply
£5.6 billion contribution to UK                        chain, owing to its reduced
GDP, 86,400 UK jobs and more                           procurement of UK goods and
than £1.4 billion in tax revenue.                      services. This impact spreads
                                                       into its induced employment
                                                       impact also, as reduced activity
                                                       in the supply chain impacts
                                                       how much those employed by
                                                       Airbus’ suppliers spend in the
                                                       consumer economy.

            19
                 HMRC, (2021), ‘HMRC tax receipts and National Insurance contributions for the UK’
       22   20
                 HM Treasury, (2021), ‘Levelling Up Fund: prospectus’; Department for Education, (2021), ‘Catch-up premium’
The impact of Airbus on the UK Economy

Fig. 9: Airbus’ gross value added contribution to UK GDP
£ million
10
                                                     9.3
9

 8                                          3.0      3.0

 7

6                                                                                                     5.6

 5
                                                                                      2.1             2.1
                         4.4                         4.4
4

 3

 2                                                                    2.9                             2.9

 1        2.0                                        2.0
                                                             0.5                                     0.5
0
         Direct        Indirect           Induced   Total   Direct   Indirect     Induced            Total
                                   2019                                      2020
Source: Airbus, Oxford Economics                                             Figures may not sum due to rounding

Fig. 10: Airbus’ contribution to UK employment
Thousands
140
                                                    128.3

120
                                            41.8     41.8
100
                                                                                                     86.4

 80
                                                                                      28.4           28.4

 60
                          73.8                       73.8

 40
                                                                      45.9                           45.9

 20

            12.6                                     12.6     12.1                                    12.1
     0
          Direct        Indirect        Induced     Total   Direct   Indirect    Induced             Total
                                    2019                                     2020
Source: Airbus, Oxford Economics                                             Figures may not sum due to rounding

                                                                                                             23
The impact of Airbus on the UK Economy

24
The impact of Airbus on the UK Economy

                                         25
The impact of Airbus on the UK Economy

      3. A
          IRBUS’ UK OPERATIONS IN
         2021 AND BEYOND
      This study was published in                  Airbus’ long-term commitment                     to an average of 45 aircraft
      March 2022, when sufficient                  to the UK continued through                      per month in Q4 2021, with
      detail to conduct a full                     2021 as the aviation industry                    the vast majority of wings
      economic impact assessment                   endured restrictions and                         manufactured in Broughton.21,22
      for 2021 was not available.                  reduced passenger numbers.                       This is higher than the average
      Instead, this section seeks                  There was some recovery                          of 40 aircraft per month
      to provide an indication of                  in commercial aviation—the                       produced in 2020 (from April
      Airbus’ activity in the UK                   total number of global air                       onwards), but still below the
      during 2021 using preliminary                passengers was 49% below                         2019 record-high levels of 60
      management accounts.                         2019 levels, compared to                         aircraft per month.23
                                                   60% below in 2020—creating
                                                   speculative demand for the

14%
                                                   future and permitting Airbus
                                                   to increase production levels.
                                                   Having reduced production
                                                   rates to 30 aircraft per month
growth in revenues in 2021.                        in Q2 2020, Airbus increased
                                                   its A320 production rate

      3.1 AIRBUS’ ACTIVITY IN THE UK IN 2021

      Airbus’ UK operations                        Fig. 11: Airbus UK-operations’ revenue and employment,
      continued to earn significant                2019 to 2021
      revenues in 2021, totalling £4.8               Employment (left-hand axis)                               Revenue (right-hand axis)
      billion.24 This marks a slight
                                                   Jobs                                                                         £ billion
      increase on its 2020 revenues.
      Initial management accounts                  14,000                                                                            7.0
      suggest nearly three-quarters                                         6.8
      of this total were generated                 12,000        12,621                                                              6.0
      by the Commercial Aircraft                                                           12,134
      division, while the Defence and              10,000                                                          10,755            5.0
      Space division generated more                                                                                         4.8
      than £1 billion in revenues—
                                                    8,000                                             4.2                            4.0
      similar to both 2019 and
      2020. For further context, the
      company has posted positive                   6,000                                                                            3.0
      global results for 2021, earning
      revenues of €52 billion for                   4,000                                                                            2.0
      2021—up 4% compared to
      2020—and profits of €4.8                      2,000                                                                            1.0
      billion, compared to €1.7 billion
      in 2020 (finalised UK results
                                                          0                                                                          0.0
      were not yet available at time                                   2019                     2020                    2021
      of publishing).25                            Source: Airbus

           21
              Airbus, (2021), ‘Airbus provides suppliers with an update on production plans’
           22
              Airbus aircraft assembled in Tianjin, China are equipped with domestically manufactured wings.
      26   23
              Airbus Operations Limited, ‘Annual report and financial statements (2019 and 2020)’
           24
              Preliminary Airbus UK company accounts, subject to external audit, prior to publication
           25
              Airbus, (2022), ‘Airbus reports strong Full-Year (FY) 2021 results’
The impact of Airbus on the UK Economy

The company underwent                          3.2 LOOKING TO THE FUTURE
restructuring associated with
lower production levels in                     Looking ahead, with more than                  Not only will these orders
2020 and 2021. Its workforce                   7,000 outstanding orders for                   increase activity and job
reduced to 10,800 employees                    commercial aircraft, there is                  security at the Airbus
across the UK. While this is                   scope for production levels to                 facilities that design, test, and
below its pre-pandemic level,                  rise far beyond the 2019 levels                manufacture components
the impact on Airbus’ direct                   that supported the economic                    (most significantly the wings),
employment has been limited                    activity primarily evaluated                   but they will increase Airbus’
relative to the fall in its revenues,          in this report. Using our                      procurement of other goods
as the company has looked                      previous example of the A320                   and services. Some 56% of
to retain its skills base and                  family, Airbus plans to raise                  the procurement undertaken
manufacturing capacity. Its                    production of these aircraft to                by Airbus’ UK operations are
2021 revenues were 30% below                   75 per month by 2025.                          spent within the UK.
those realised in 2019, but its
workforce was only 15% smaller                 Airbus scaling up production

                                                                                                 7,000
(Fig. 11), retaining its skills base           will impact the UK in a
for the future. It is worth noting             number of ways. For one, the
that, while there are no data                  vast majority of wings for
available yet on the contraction               the A320, A330, and A350
in employment within the air                   families—for which there are                      outstanding orders for
and space manufacturing sector                 more than 6,600 outstanding                       commercial aircraft.
specifically, however the total                orders (Fig. 12)—are
number of people employed in                   manufactured at Airbus’ plant
UK manufacturing was 9% lower                  in Broughton, North Wales.27
in 2021, compared to 2019.26

Fig. 12: Outstanding orders for Airbus commercial aircraft
6,000
                                                     5,839
5,000

4,000

3,000

2,000

 1,000

                      475                                                              312                             456
     0
                     A220                        A320 family                          A330                            A350
           Wings manufactured
            in Belfast (Spirit)
Source: Airbus Annual Report 2020

 ONS, (2021) ‘EMP13: Employment by industry’ Note—first three quarters of the year only.
26

 Airbus, ‘Orders & Deliveries December 2021’. Note—Airbus aircraft assembled in Tianjin, China are equipped with domestically
27

manufactured wings.                                                                                                             27
The impact of Airbus on the UK Economy

      An increase in production                        Airbus’ continued commitment                     entirely in the UK, supporting
      levels will also benefit Airbus’                 to the UK extends beyond                         the UK Space Agency initiative
      UK suppliers who sell to its                     its commercial aircraft. For                     for sovereign UK end-to-
      overseas operations. This                        instance, the company is                         end satellite production and
      includes the A220 wings                          contracted to expand and                         support.28 These commitments
      it purchases from Spirit                         enhance the Ministry of                          are especially important
      AeroSystems in Belfast, plus                     Defence’s Skynet fleet. This                     given the UK Government’s
      its vast spending on engines                     will involve the UK-based                        2021 integrated defence
      manufactured by Rolls-Royce                      development, manufacture,                        and security review and the
      in Derby.                                        cyber protection, assembly,                      defence space strategy, which
                                                       and integration of the Skynet                    highlighted the important
      Indeed, the positive impacts                     6A military communications                       connection between the UK’s
      of increased manufacturing,                      satellite—a programme which                      sovereign capability in the
      along with other planned                         is planned to sustain 550 high-                  space sector and securing
      projects across Airbus, would                    value UK jobs and is scheduled                   the UK’s future security
      span all three of the company’s                  for launch in 2025. It will be                   and prosperity.
      channels of economic impact                      the first time a modern era
      in the future—as demonstrated                    geostationary satellite is
      during ‘normal’ 2019 operations.                 designed, built, and tested

      3.3 AIRBUS’ RECENT INVESTMENTS IN THE UK

£250 million
                                                       To deliver increased                             These two investments alone
                                                       production levels in the future,                 equate to 6% of its revenue
                                                       Airbus has invested substantial                  in the year, of significant
                                                       sums in its UK operations in                     note given the operating
                                                       2021. With significant notable                   environment.
spent buying the land at its                           investments including:
Broughton and Filton sites
in 2021.                                               •   £250 million to purchase
                                                           the land on which its Filton
                                                           and Broughton sites are
                                                           operating.
                                                       •   £35 million to construct
                                                           Orbit House, Airbus
                                                           Defence and Space’s new
                                                           headquarters, opened in
                                                           2021 by the Prime Minister.29

            28
                 HM Government, (2021), ‘National Space Strategy’
      28    29
                 The Comet, (2021), ‘Prime Minister Boris Johnson opens Airbus’ new £35 million facility’
The impact of Airbus on the UK Economy

                                         29
The impact of Airbus on the UK Economy

CASE STUDY: AEROSPACE INTEGRATED
RESEARCH AND TEST CENTRE, AIRTeC
In 2021, Secretary of State for Business, Energy                          As well as being used to test aerospace
and Industrial Strategy formally opened the                               structures, Airbus is exploring use of these
£100 million Aerospace Integrated Research                                facilities for UK research activities outside of
and Test Centre (AIRTeC) at Airbus’ Filton                                the aerospace sector, including for example,
site.30 The research and testing facility, jointly                        reinforcing domestic capabilities within the UK’s
funded by the Aerospace Technology Institute,                             nuclear and maritime industries.
ATI (£40 million) and Airbus (£60 million),
is designed to test aircraft parts from wings                             The facility is critical to Airbus’ largest research
down to individual components, along with                                 programme to date, the Wing of Tomorrow (as
providing advanced research laboratories and                              discussed in Chapter 6), and will be, according
collaborative office spaces to both Airbus and                            to Airbus, a key asset in helping to accelerate
their external partners.                                                  the development of commercial, globally
                                                                          operating, zero-emission aircraft.
The AIRTeC facility is designed to contribute
to Airbus’ strategic plan within the UK to                                During the opening launch event John Harrison,
accelerate the design, manufacture, testing,                              General Counsel and UK Chairman of Airbus,
certification and commercial operation of                                 said:
future zero-emission aircraft.
                                                                          “Airbus makes a significant contribution to the
AIRTeC includes 65,000m² of specialist test                               UK aerospace industry and we are delighted
space featuring,                                                          to welcome the Secretary of State to help us
                                                                          showcase our fantastic facility. AIRTeC will take
•     A 40-metre-long strong floor and two strong
                                                                          our research and testing capabilities at Filton
      walls capable of testing two full-size wings
                                                                          to the next level and will make us even more
      simultaneously. The adaptable modular facility
                                                                          competitive for the future.”
      can be used to test the ultimate strength of
      wings or to understand the lifespan of designs
                                                                          Joint investment projects like this—between
      under realistic operating conditions.
                                                                          the UK Government and Airbus—are resulting
•     A high-capacity loading machine—capable of                          in the UK developing sovereign expertise in
      applying forces up to 25MN, equivalent to the                       advanced industrial products and processes,
      weight of over 200 double decker buses, or                          including those targeting decarbonisation.
      over 2,500 cars being stacked atop a wing.31
•     Extensive laboratory capabilities to condition
      test items pre-test and examine them again
      down to a molecular level post-test.

30
     Airbus, (2021), ‘U.K. Secretary of State launches the joint-funded Aerospace Integrated Research and Test Centre’
31
     Assumption made that a double decker bus weighs 12 tonnes and an average car weighs 1 tonne.

30
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