UK: Airbus inquiry seeks to shed light on use of middlemen

A criminal investigation into Airbus’s practices in selling planes and arranging financing overseas will seek to shed light on the use of third parties who are often critical in closing deals. The inquiry, which the UK’s Serious Fraud Office said it opened in July and Airbus disclosed Sunday, could run for years. While Airbus may not feel the short-term impact, given that it has dropped the questionable middlemen and expects suspended financing guarantees to be restored, an unfavorable outcome could result in fines and damage the company’s reputation. Scrutiny of the use of third parties comes as Airbus and its rivals seek greater influence in emerging markets, which have taken over from the US and Europe as drivers of growth in the commercial aircraft business. Airbus said in April that top management had identified questionable use of third parties and alerted the UK and other regulators, but the formal investigation brings the issue to a new, more serious level. “The news came as a shock, since the issue had been downplayed,” Kepler Cheuvreux analyst Christophe Menard said in a note to investors Monday. “It could turn out to be more serious than envisaged.”<br/>One focus of the SFO inquiry is Airbus’s failure to disclose its use of third parties to UK Export Finance, an agency that arranges credit guarantees for overseas sales. Airbus lost export credit in April after the plane maker informed authorities of inaccuracies in a number of applications. Government guarantees are expected to resume by year-end, Airbus CEO Tom Enders has said.<br/>