U.K. Aviation Suppliers Strained by Output Boost Seek Tax Breaks

U.K. aerospace suppliers that together employ about 100,000 people are seeking government support in form of tax relief to help finance investments needed to satisfy growing output from Airbus Group (AIR) and Boeing Co. (BA)

Smaller companies supplying major aviation manufacturers would benefit from relief on research and development expenses and allowances to write off some capital expenses, said Paul Everitt, the head of aerospace lobby body ADS Group. The U.K. is also alone among OECD members in not allowing tax depreciation on new building outlays, the group said.

“There are some shifts in U.K. government policy that could make a big difference,” Everitt said in an interview.

Boeing and Airbus last year combined delivered a record 1,275 jets, with output set to rise again this year as backlogs reach eights years of production. Both manufacturer have had to help prop up suppliers that have struggled to keep pace.

ADS, which claims the U.K. holds a 17 percent global market share in aerospace and generated 10.3 billion pounds ($17 billion) in civil exports in the field in 2012, said delivery of jets seating more than 100 passengers will exceed 1,350 aircraft this year.

While Everitt said the government has been supportive of the aerospace industry, including research funding initiatives, growing global competition means pressure remains to keep domestic suppliers strong.

“We can’t afford to be complacent,” he said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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