LONDON/PARIS (Reuters) - Engineering company GKN said on Monday it had agreed to buy a wing components plant at Filton in Britain from planemaker Airbus for 136 million pounds.
The deal, which follows almost a year of negotiations,calls for GKN to invest another 125 million pounds into theplant over five years to help pay for costly lightweightmaterials needed for the A350XWB, Airbus's next model due nextdecade.
The Filton unit being sold employs 1,500 workers or about aquarter of the total Airbus workforce in the area.
The rest of the Filton site near Bristol, where theAnglo-French Concorde was partly developed and produced in the1960s, will still design wings for EADS unit Airbus.
The GKN deal is part of Airbus's efforts to attract outsideinvestment to its plants to help share the A350's 10 billioneuro (7.9 billion pound) development cost.
The minister responsible for businesses, John Hutton, saidthe government would pump 60 million pounds of "repayablelaunch investment" into the venture to help with thedevelopment of parts of the A350's new all-composite wings.
Such loans, which the United States has in the pastdescribed as hidden subsidies, are at the centre of atrans-Atlantic row over mutual allegations of illicit support.
Airbus has so far held off from applying for governmentloans for the A350 to avoid inflaming the dispute at the WorldTrade Organisation, but says the mechanism is fair and is inturn pursuing rival Boeing for alleged U.S. subsidies.
The terms of the loans to GKN were not disclosed.
A Boeing spokesman declined to comment except to say that"government loans need to be on commercial terms."
The government, which said the price tag of the dealbetween GKN and Airbus was slightly higher than that announcedby GKN at 150 million pounds, is also helping with 50 millionpounds in broader research and technology aid.
In 2009, the outsourced Filton operation will have revenuesof some 375 million euros and will boost earnings per share andgenerating cash for its new owner, GKN said.
Airbus did not say how much the GKN deal would contributeto its Power8 restructuring plans, but said it would provideinvestment in alternative composite materials that would nototherwise have been available to Filton, thus securing jobs.
"Business has grown so rapidly that we want to focus oncore activities in coming years and we found we couldn't investeverywhere," Executive Vice President for Programmes TomWilliams said in an interview.
The Filton sale comes as Boeing workers in the UnitedStates remain on strike over a contract dispute and union fearsof outsourcing in an increasingly global aerospace industry.
The strike, which has halted all Boeing airplane productionand may further delay the maiden flight of the new 787Dreamliner, was in its tenth day on Monday.
Airbus meanwhile denied a report it was facing more delayson its A380 superjumbo, which entered service last year.
Selling Filton was originally part of a broader Airbus planto sell up to seven European aerostructure plants in return forinvestment to make the A350XWB lighter and more fuel-efficientthan current aircraft, matching the hot-selling 787.
The two planes are competing in the lucrative market formid-sized twin-jets capable of long range while saving fuel.
But talks to sell two Airbus airframe plants in France andthree in Germany broke down in the summer when financing driedup during the global credit crisis.
Airbus says it will spin off the unsold French and Germanplants to new subsidiaries and sell them when markets improve.
(Reporting by Mike Elliott and Tim Hepher; Editing byQuentin Bryar, Dave Zimmerman)
