The consortium producing the Voyager aerial tankers for Britain has moved the work to Spain, leading to the likely loss of 320 UK jobs.
The EADS-led AirTanker consortium, in which British aero electrics group Cobham is a shareholder, on Friday said Airbus Military and Cobham Aviation Services had agreed that 10 aircraft would be converted to air-to-air refueling jets in Getafé, near Madrid, rather than at Cobham's facility in Bournemouth, south England.
Britain's Ministry of Defense (MoD) agreed a GBP£10.5 billion (USD$16.44 billion) deal to lease 14 modified Airbus A330 aircraft from the AirTanker consortium in 2008.
AirTanker said the move to put the engineers and design team in one place would help the consortium deliver the planes to the UK "on time and to cost".
The first two planes were converted in Spain by Airbus Military, the aircraft's designers. Planes three and four will be converted in Britain but the remainder will be upgraded in Spain.
"The change means that up to 320 UK jobs will unfortunately go - this affects 237 Cobham jobs and those of 83 contractors - and the change will happen by the end of the first quarter of next year," a source said.
The tanker planes, which are 60 meters long, can carry 100,000 liters of fuel and pass it on to other planes at a rate of 5,000 liters a minute.
"Cobham and Airbus Military have mutually recognized that it is the best way of meeting their own commitments and have taken the responsible decision to transfer the work," said AirTanker chief executive Phill Blundell.
Cobham said there had been no technical issues with the conversion process and that it would suffer no material financial impact as a result of the change.
The project has been dogged by controversy since the MoD agreed the deal in 2008.
In 2010 the UK Parliament's Public Accounts Committee concluded in a report there were "significant shortcomings" in the way the ministry had contracted to lease the tankers.
However, the government pushed ahead with the deal because the RAF urgently needs replacements for its aging Lockheed Martin TriStars and Vickers VC10s.
The MoD was criticized two years ago after it was revealed that Voyagers lacked the protective gear necessary to operate in war zones.
Earlier this year AirTanker planes encountered leakage problems during in-flight test refueling of British Tornado jets and they face compensation claims from the UK defense ministry if the problems result in delays or extra costs.
Nine of the planes are due to enter service in 2014.
The AirTanker consortium is made up of EADS, France's Thales, in-flight refueling pioneer Cobham, Rolls-Royce and Babcock International.
The Voyager entered service for training earlier this year, allowing flight crews to train on the aircraft for aeromedical and transport roles.
