July 18, 2018 / 1:06 PM / 3 months ago

UPDATE 1-Airbus says activating Brexit contingency plans as UK strategy 'unravelling'

(Adds CEO comments, background)

By Sarah Young and Victoria Bryan

FARNBOROUGH, England, July 18 (Reuters) - Airbus is activating its Brexit contingency plans as the British government's strategy for leaving the European Union appears to be "unravelling," the head of Europe's biggest planemaker said on Wednesday.

Britain is due to leave the EU in less than nine months, but there is little clarity over its future relationship with the world’s biggest trading bloc, creating a headache for companies that rely on the smooth flow of goods and parts across borders.

Airbus, which employs 15,000 people in Britain, has issued a series of warnings about the dangers of the country quitting the EU without an agreed deal, saying this month that could halt output at its plants and leave aircraft grounded.

CEO Tom Enders said at the Farnborough Airshow that the so-called White Paper published by the UK government last Thursday which laid out its post-Brexit plans for trade with the EU was positive, but that events since had changed that view.

"I thought that the White Paper was going in the right direction," Enders told reporters.

"Now we see that unravelling again so all the more reason for us to take more serious decisions," he said, referring to the Conservative government's move to accept amendments to its plan from a group of hardline Brexit supporters in its party.

Airbus will now activate contingency plans to ensure its production can continue whatever the trading relationship after Brexit, Enders said, adding the main focus was on stockpiling parts that currently arrive at factories on a "just in time" basis.

"We are now activating contingency plans which largely focus on building some buffers ... so we should be able for a short period after the exit happens to mitigate the effects," he said.

British engine-maker Rolls-Royce said on Tuesday it too could start stockpiling parts, but would not do that until around the fourth quarter of this year.

Even if UK Prime Minister Theresa May can secure enough support for her Brexit blueprint at home, she still needs to win agreement from the EU. (Reporting by Victoria Bryan and Sarah Young; Editing by Mark Potter)

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