A ROW over a £3bn aircraft carrier project will not cost North-East jobs, the Ministry of Defence (MoD) said last night.

Newspaper reports have suggested that BAE Systems, a partner in the contract with French group Thales, was threatening to pull out of the deal.

It follows the MoD appointing US company Kellogg Brown and Root (KBR), a subsidiary of Halliburton, to manage the programme.

Shipbuilder Swan Hunter, which has yards at Port Clarence, Teesside, and Wallsend, North Tyneside, is in line for £500m of work on the carriers. It is scheduled to start in 2008 and any delay could lead to the yards being mothballed.

An MoD spokesman said last night that talk of delays was incorrect.

"The in-service dates remain as they are," he said. "They will be finally ratified when the carrier programme goes through some time later this year."

BAE's objections are believed to centre on the details of KBR's role in the alliance.

The US-based engineering and construction group is thought to want its personnel at BAE's shipyards and could demand a say in the design of the carriers.

Swans hopes to win up to 30 per cent of the work, building one major section for each of the 60,000 tonne carriers.

The contract would double the workforce at its yards, from 1,500 to 3,000.

The carriers, to be called HMS Queen Elizabeth and HMS Prince of Wales, are expected to be the most powerful warships built in the UK.

Swan Hunter is due to complete its £80m work on the Lyme and Largs Bay ships for the Royal Fleet Auxiliary next year.

The company had voiced concerns that it would be left with a gap between the end of that contract and the start of work on the carriers and would have to lay off workers.

But last week it told The Northern Echo it remained optimistic the MoD would provide interim work.