The chief executive of Airbus has urged Prime Minister Andy Burnham not to award the UK's £2.4bn Skynet 6 military satellite contract to US rival Lockheed Martin, warning that the decision could cost Britain its key role in the European space industry for decades to come.
The intervention, in a letter from Airbus chief executive Guillaume Faury, intensifies a last-minute lobbying battle over the contract to build the satellites that will carry the British armed forces' most sensitive communications until 2042. The Skynet 6 system would replace Skynet 5, currently operated by Airbus.
Faury is understood to have warned that choosing Lockheed Martin could affect the UK's strength in military satellites in Europe for decades. Senior industry figures have previously said Airbus's UK satellite operations at Stevenage and Portsmouth, which employ 600 people, would not be viable without the contract, potentially forcing their closure.
The warning comes as Airbus, Thales and Leonardo work on a long-awaited merger of their space subsidiaries, known as Project Bromo, to create a European champion able to rival leading US companies. Faury is said to have cautioned that the UK could miss out on becoming the European hub for military satellite communications if its domestic operation were no longer viable.
Politicians in north-east England, however, have lobbied for the Lockheed Martin bid, which includes a new factory in Durham. Luke Akehurst, the Labour MP for North Durham, said it would mean a "state-of-the-art new manufacturing facility" in the region, representing "a massive investment".
Lockheed Martin said it was "unable to comment on the ongoing procurement process", but said its UK subsidiary, "a British company", would establish facilities with regional partners in the north-east "to provide the UK with a sovereign space capability", including a UK design authority and a UK chief engineer. People close to the company strongly denied that the US government would control the satellites.
The delayed decision comes at a sensitive moment, after Ukraine complained that its access to Elon Musk's Starlink satellite network was restricted, apparently at the behest of the US government. Several sources said no final decision had been made, though some believed the Ministry of Defence preferred Lockheed's bid. The final decision rests with Burnham and Chancellor John Healey.
Analysis
Why This Matters
- The contract will determine who controls Britain's most sensitive military communications for the next 16 years, a question of sovereignty as much as procurement.
- The outcome could decide whether the UK remains a player in the European military satellite industry or cedes ground to a US prime contractor.
- The decision lands at a moment of heightened unease about reliance on US-controlled satellite services, following Ukraine's complaints about restricted access to Starlink.
Background
The Skynet programme has provided secure military satellite communications for the UK armed forces for decades, with the current Skynet 5 system operated by Airbus. The UK is now deciding who will build its successor. The contract is also entangled with a broader restructuring of the European space industry: Airbus, Thales and Leonardo are pursuing a merger of their space units to form a European champion capable of competing with dominant US companies. The UK's place in that consolidation may hinge on whether it retains a domestic satellite manufacturing capability.
Key Perspectives
Airbus: Argues the contract is strategic rather than purely commercial. Losing it could make its UK satellite sites unviable and, once the Project Bromo merger completes, exclude the UK from becoming Europe's hub for military satellite communications.
Lockheed Martin: Presents itself as a British company for this project, promising a UK design authority, a UK chief engineer, jobs and exports from a new Durham facility, and denies that the US government would control the satellites.
North-east England's MPs: Back the Lockheed bid for the economic prize: a state-of-the-art factory, supply chain opportunities and significant regional investment.
Critics and sceptics: See risks in handing sovereign military communications to a US contractor, concerns sharpened by the reported Starlink restrictions affecting Ukraine, and warn that the industrial consequences for Airbus's UK sites could be irreversible.
What to Watch
- Whether Burnham and Healey announce a decision on the contract, and which way the Ministry of Defence's apparent preference tips the balance.
- Any further statements from Airbus about the viability of its Stevenage and Portsmouth sites if the bid fails.
- Reactions from France, Germany and Italy if the UK chooses Lockheed, and whether the decision affects the planned Project Bromo merger.