Airbus Warns UK Could Lose Key European Space Role Over Skynet Satellite Contract

Airbus chief executive Guillaume Faury has warned Prime Minister Andy Burnham that choosing Lockheed Martin to manufacture military satellites could cost the UK a key European space role. The intervention intensifies last-minute lobbying for the £2.4 billion contract. Faury is understood to have written to Burnham suggesting that the Skynet provider decision could affect the UK's military satellite strength in Europe for decades. The letter seeks to influence the decision against Airbus's US rival.

The Skynet 6 satellites will carry the British armed forces' most sensitive communications up to 2042. The satellites will replace the Skynet 5 system operated by Airbus. Several sources said they believed no final contract decision had been made. However, some sources said they believed the Ministry of Defence preferred Lockheed Martin's bid. The final decision will rest with Burnham and Chancellor John Healey. A decision had previously been expected in the summer, but the decision was delayed partly by Burnham taking office.

Faury's letter is thought to have warned of longer-term consequences for the UK's European space role if Airbus loses the contract. Senior industry figures have previously claimed that Airbus's UK satellite operations would not be viable without the next Skynet contract. Those figures claimed Airbus might consequently close the company's Stevenage and Portsmouth sites, which employ 600 people. Airbus, Thales and Leonardo are working on Project Bromo, a long-awaited merger of the manufacturers' space subsidiaries. The merger aims to create a single European company with the scale to rival leading US companies. Faury is understood to have warned that an unviable British operation could prevent the UK becoming the European hub for military satellite communications after the merger.

Lockheed Martin, one of the US's largest prime defence contractors, says the company's UK subsidiary will have full control over the satellites eventually built in the UK. People close to Lockheed Martin have strongly denied that the US government would control the satellites. A Lockheed Martin spokesperson declined to comment on the ongoing procurement process. The spokesperson said Lockheed Martin UK would establish facilities alongside regional partners in north-east England to provide a sovereign space capability. The spokesperson said the project would create jobs, supply chain opportunities and export potential, with a UK design authority and UK chief engineer.

Politicians in north-east England have lobbied for Lockheed Martin's bid, which would include a new factory in Durham. Labour MP for North Durham Luke Akehurst said the bid would deliver a state-of-the-art manufacturing facility and major investment in the region's reindustrialisation. North-east England Mayor Kim McGuinness said securing the investment would bring £100 million and create 500 high-skilled jobs, alongside wider supply chain benefits. McGuinness said satellite manufacturing would build on existing ties between the region's universities and industry.

The delayed decision comes after Ukraine complained that access to Elon Musk's Starlink satellite network was restricted, apparently at the US government's behest. Unite, one of Labour's biggest union backers, warned against handing Britain's space industry to Americans amid increased questions about UK reliance on the US government. Burnham will also have to consider the bids' financial terms and the capabilities each company can offer.

A government document for a related system said satellites must address proliferating capabilities to disrupt, deny, degrade or destroy space-based systems. The document identified radio jamming, hacking and direct physical attacks on satellites as possible concerns.