Airbus urges European leaders to refrain from Russian titanium sanctions



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By Tim Hepher

April 12 (Reuters) - Airbus AIR.PA urged Europe on Tuesday not to block imports of titanium from Russia, saying sanctions on the strategic metal would damage aerospace while barely hurting Russia's economy.

Widening the action taken after Russia's invasion of Ukraine to titanium, used in airplanes and jet engines, would "not be appropriate," Chief Executive Guillaume Faury said at an annual shareholder meeting.

Ukrainian President Volodymyr Zelenskiy has repeatedly called on Western governments to impose stronger economic sanctions on Russia.

The European Union said on Monday more sanctions were an option and British Prime Minister Boris Johnson said on Saturday Kyiv's allies would continue to tighten pressure on Moscow.

Russia is the largest producer of titanium, a strategic metal prized for its strength relative to its weight.

The EU has so far avoided banning Russian commodities other than steel and coal, and titanium remains exempt from restrictions on trade with Russia.

"Airbus is applying and will continue to apply the sanctions fully," a company spokesperson said.

"Sanctions on Russian titanium would hardly harm Russia, because they only account for a small part of export revenues there. But they would massively damage the entire aerospace industry across Europe," the spokesperson added.

Airbus is accelerating a search for non-Russian supplies in the long term, while its needs are covered in the short and medium term, Faury said.

In March, Airbus said it "is directly sourcing titanium from Russia as well as from other countries" and indirectly acquiring Russian titanium via suppliers.

On Tuesday, it reaffirmed this in answer to a Reuters query but declined to say when it had last received Russian titanium.

OUTLOOK CONFIRMED

Airbus has said it relies on Russia for half its titanium needs, while state-backed VSMPO-AVISMA VSMO.MM provided a third of Boeing's needs under a deal renewed last November. Last month, Boeing said it had suspended buying Russian titanium.

VSMPO-AVISMA is 25%-owned by state defence conglomerate Rostec. It relies on aerospace for three quarters of its sales.

Aerospace officials say Airbus is partly concerned about the reliance on Russia at suppliers like France's Safran SAF.PA , which uses titanium to make jet engine parts and landing gear.

Safran said in February it had reserves for several months and depended on Russia for less than half its needs. It did not immediately respond to a request for comment on whether it shared Airbus' worries about possible sanctions.

Aerospace is not the only industry wrestling with Russia's commodity clout. U.S. utilities have lobbied the White House not to ban Russian uranium, Reuters reported last month.

More than 400 companies have withdrawn from Russia since war started on Feb. 24, according to researchers. About 80 have kept a presence, while suspending new investments.

Faury reaffirmed Airbus' 2022 profit guidance but said it was clear the war in Ukraine was "making it harder as we now have a more challenging risk profile" due to economic risks.

"That being said, we still have three quarters ahead of us and we continue to believe we can achieve it," he said.
Reporting by Tim Hepher; Additional reporting by Josephine Mason, Francesco Guarascio and Amran Abocar; Editing by David Goodman and Jason Neely

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