U.S. to study UK loan for Airbus spin-off

By Mike Elliott and Tim Hepher

LONDON/PARIS (Reuters) - The United States said on Monday it would scrutinise the use of a British government loan to help launch a new aerospace venture to be spun out of Airbus in the UK and sold to engineering firm GKN (GKN.L).

The 60 million pounds reimbursable loan was announced by the government on Monday alongside a long-awaited deal for GKN to buy part of the historic Airbus plant at Filton in southwest England for 136 million pound.

Following almost a year of negotiations, GKN has also agreed to invest another 125 million pounds in the plant over five years to help pay for costly lightweight materials needed for the A350XWB, Airbus's next model due next decade.

The Filton unit being sold employs 1,500 workers or about a quarter of the total Airbus work force in the area.

The rest of the Filton site near Bristol, where the Anglo-French Concorde was partly developed and produced in the 1960s, will still design wings for EADS (EAD.PA) unit Airbus.

The GKN deal is part of Airbus's efforts to attract outside investment to its plants to help share the A350's 10 billion euro development cost. The planemaker's hopes for similar deals in France and Germany were hit by the credit crisis this year.

Britain's minister responsible for businesses, John Hutton, announced the government would pump 60 million pounds of "repayable launch investment" into the venture to help with the development of parts of the A350's new all-composite wings.

Although terms of the loans were not disclosed, the official label for them matches a system of state loans that has been used in the past to develop Airbus planes but has been attacked by the United States as an example of hidden subsidies.