VZCZCXRO9541
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #0308 0841449
ZNR UUUUU ZZH
R 251449Z MAR 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 0418
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3915
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS MADRID 000308 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR MARTYN 
COMMERCE FOR ELLIOTT, CABLE CODE 6950 
STATE FOR KOCH 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EIND ETRD EU SP
SUBJECT: SPAIN: GOVERNMENT FINANCIAL SUPPORT FOR AIRBUS 
 
REF: A. SECSTATE 10592 
     ¶B. PARIS 334 
     ¶C. MADRID 184 
 
¶1. (SBU) Summary. Ministry of Industry, Tourism, and Commerce 
officials have not responded to reftel questions on the 
Airbus A350.  However, media reports, while inconclusive, 
suggest that the GOS was in discussions with Airbus in the 
fall to provide launch aide for this aircraft, but is now 
hesitating.  End Summary. 
 
¶2. (U) President of Airbus Spain Manuel Hita announced in 
October that the company had reached preliminary agreement 
with its stakeholder countries, including Spain, to finance 
development of the A350 through reimbursable, low interest 
rate loans.  According to Hita, discussions would be ongoing 
throughout the following months to determine the terms of the 
loans as well as what portion of the estimated 11 billion 
euro development costs each country would finance.  He 
further noted that any agreement reached would be submitted 
to the European Commission for approval. 
 
¶3. (U) Media reports in late January indicate that GOS 
officials were having second thoughts about providing 
financing for the Airbus 350 project.  News that the 
Government of France had made available 5 billion euros in 
credit to Airbus through prime lenders (ref B) was met by 
"interest" from the GOS.  However, an unnamed official at the 
Ministry of Industry told a leading financial daily that the 
GOS was unlikely to provide similar type financing. 
 
¶4. (SBU) Regardless of whether the GOS decides to provide 
support for the A350, this project is somewhat significant 
for the GOS.  Minister of Industry Miguel Sebastian has 
mentioned the A350 project a number of times over the past 
year, noting that the project would result in thousands of 
new jobs for Spaniards.  The minister has also been keen to 
highlight a prior agreement with Airbus in which Spanish 
businesses would have claim to 12 percent of the production 
business of A350 aircraft parts (specifically the production 
of compound materials to be used in the tail and other parts 
of the plane). 
 
¶5. (SBU) Comment: The extent to which the GOS is willing to 
finance the A350 project will likely be influenced by its 
deteriorating public finance situation.  The GOS ran a 3.8 
percent of GDP budget deficit in 2008, and predict a 5.8 
percent deficit in 2009, though the actual deficit may be 
even greater. 
CHACON