The Italian-headquartered firm has been in talks for months over £1bn contract with the UK government

A Somerset helicopter maker says it has had “good dialogue” with the government regarding a £1bn contract just three months after it warned its only UK factory was under threat.

Italian-headquartered Leonardo owns Britain’s last helicopter plant in Yeovil. The West Country site has been an aerospace hub for more than 100 years and employs thousands of people directly and in the supply chain.

Although the site makes helicopters for civil use, such as search and rescue, the MoD is the company’s most important customer. A decision to withdraw from the historic Somerset site would have major implications for the local economy.

In November, Leonard chief Roberto Cingolani told investors the company could not “subsidise Yeovil forever” after delays to an agreement with the British government over the contract. The company is the only bidder and has been in talks with ministers for months, leaving the site’s 3,000-strong workforce in limbo.

However, it is understood that Leonardo’s vice president of market development, Adam Wardrope, is “feeling hopeful” after recent discussions with officials.

The contract is for Leonardo’s conventional helicopters, but earlier in February the firm unveiled its latest model – Britain’s first autonomous full-size helicopter, known as Proteus. The helicopter has been designed to conduct various missions such as anti-submarine warfare.

Mr Wardrope told the BBC that Proteus is “part of the future of Yeovil” but that Leonardo’s Somerset workforce was “desperate” to learn about the company’s future.

“We’re still very busy, things like Proteus, support contracts, and international customers we’re servicing,” Mr Wardrope told the BBC. “Everyone’s very busy, there’s still a future in the fact that there’s lots of work to do.”

Ben Clarke of workers union Unite said: “Any employee who works on the Yeovil site is definitely in a slight confusion as to what’s happening at the moment.

“The Government needs to wake up and understand we’re having these delays by not giving an answer to Leonardo either way, it’s putting huge pressure on Leonardo and the constituency.”

The news comes just days after Prime Minister Sir Keir Starmer was reported to be considering a hike in the UK’s defence spending.