Research and development

Since 2002, the Government has been authorised by the Riksdag to commission the Debt Office to enter agreements with two companies on co-financing of civil aviation industry projects.

The companies are Saab AB and GKN Aerospace Sweden AB, previously Volvo Aero Corporation, which participate in various development projects in the civil aviation industry.

The Debt Office has provided three so-called royalty loans to GKN. The loans co-financed the research and development of components for the aircraft engines Trent 900, Trent XWB and GEnx. The Trent engines are built by Rolls Royce and fitted in the Airbus A380 and A350 XWB respectively. GEnx is built by General Electric and is fitted in the Boeing 747 and 787.

The royalty loan to Saab co-financed the company's development of wing spars for the Airbus A380.

Revenue-based repayment

The royalty loans entail that Saab and GKN pay a royalty (a percentage) to the Debt Office on their revenues from the sale of wing spars and engines respectively. They pay no fixed interest or amortisation.

The royalty is intended to repay the Debt Office's co-financing of the research and development project. It should also cover borrowing and administration costs and compensate for the risk.

The Government has chosen to subsidise the royalty rate that the Debt Office has offered Saab and GKN. Part of the cost of the loan is thus funded from the central government budget.

The Debt Office has paid out a total SEK 766 million in royalty loans. The loans are expected to generate income for the Debt Office over the next 20 to 50 years.