Airbus, Boeing Wait On WTO
July 1st, 2009
The offer of launch aid to Airbus for the A350XWB is not a surprise. In fact, it has always been a question of “when” not “if“.
What Boeing found surprising is that its European rival would still seek such financial assistance, when the WTO is soon to issue a ruling on the US complaint about launch aid. For its part, the EC also lodged a counter-complaint against the USA, highlighting tax breaks, grants and subsidies against Boeing, in what Tom Enders described the 787 as “the most subsidised airplane in history.”
“I’m disappointed Airbus is going to take that stuff [launch aid] on the eve of a WTO ruling on its appropriateness. It seems to me a step backward and suggests that they think the WTO process is irrelevant,” said Boeing CEO, Jim McNerney at last month’s air show in Paris.
Second flight test Boeing 787-8
Image courtesy of Boeing
Where Boeing has had incentives to keep the 787 work in Washington State, Airbus has been careful not to single out other issues for fear of upsetting other countries’ sensitivities - particularly in Japan where Airbus has struggled to counter Boeing’s dominance. It is a well known fact that the Japanese Government had provided financial assistance to Japanese firms involved on the 787 program, but Airbus has not taken direct action on this since it knows that the companies involved are risk-sharing partners and can ill-afford to upset them while it tries to get into what is regarded widely as “Boeing territory.”
In contrast, many trade critics in the US counter such claims in that Airbus has defacto state backing from several Governments with an “unlimited resource to finance Airbus’ new products with almost zero risk”. One US trade representative had even gone as far as suggesting that any cancellations Boeing suffers due to the economic woes should be “balanced” with state aid to offset losses in the same manner that aid has been handed out to other US financial institutions - quite whether such a bail out would ever be tabled is entirely questionable.
“Launch aid has been part of the Airbus model since its inception. In fact, what it’s done, its allowed Airbus to put capacity on stream that the market may not have demanded. As such it has let to over-capacity, a diminishment in prices and a loss of market share to Boeing as a result of it. Any further development support is actually contrary to the goals governments have set,” said Bob Novick, legal counsel for Boeing.
Whilst speaking to several Boeing executives on the sidelines of the Paris Air Show, the core issue reiterated to me was how Boeing had to “invest and risk its own money” for product development. In contrast, Airbus is able to “launch new airplanes with no risk” to their finances, particularly if as in “the case of the A340-500/600″ they do not sell well nor “trigger” repayments on that aid.
The to-and-fro arguments over aid will inevitably mean that whatever ruling the WTO issues for both camps may be almost impossible to enforce.
“It [the WTO] seems to be in limbo with neither side pushing that hard. Clearly the WTO is finding it very difficult to find a way out of this one and even if it did, I doubt that it has the strength to adequately police it,” said analyst Howard Wheeldon when we spoke on the subject.
Airbus A380-800 on display at Le Bourget, France
Image copyright/owned by FleetBuzz Editorial.com
One key aspect of the Airbus position links in closely with jobs.
While it is unlikely to ever carry out its threat to wield the axe on European jobs, it is no secret that EU ministers are worried that if aid is not given, then the prospect of further work, such as on the development of an A320 successor, may not materialise - that, despite EADS sitting on a hoard of cash that quite frankly isn’t going to be spent on fanciful US acquisitions as EADS CEO Louis Gallois alluded to at the Paris Air Show.
For now, the UK (or Wales more precisely) still holds the wing work for the current crop of Airbus products. Whitehall has been on edge for months, wondering whether or not to provide financial assistance for the A350XWB while it still pours funds in for the A380 program - which by any measure it will likely never recover from the $25bn black hole it currently sits in.
Airbus seems to be content with developments at its new A320 factory in Tianjin, China and a fear exists within corridors of Brussels that more work will be farmed out there if funding becomes an issue.
The WTO appears to be stuck in a “damned if you do, damned if you don’t” situation.
Both Airbus and Boeing have benefited from varying degrees of assistance and that makes any WTO’s potential rulings very difficult to both implement and even harder to get the two companies to change the way they get financial assistance without dragging risk-sharing partners into the equation.
Regardless of what Airbus and Boeing think, the impending rulings will either leave a cloud over the WTO, or it will show that it finally has the teeth to tackle a controversial matter head on.
We won’t have to wait too much longer to find out on which side of the fence the WTO is on.
Entry Filed under: Airbus, Boeing, EADS, Howard Wheeldon, WTO
69 Comments Add your own
1. Falcon | July 1st, 2009 at 12:49
Whitehall … while it still pours funds in for the A380 program
Saj
Would you mind explaining what funds are poured in to the A380 program at this time? To my knowledge the last money was the RLI’s at the start of the program.
2. Paula K | July 1st, 2009 at 13:04
Lets face it, nothing will happen to either firm and the WTO will just embarrass itself for the toothless entity its always been - just like the UN.
The status quo will remain unchanged.
3. Vero Venia | July 1st, 2009 at 13:50
2. Paula K | July 1st, 2009 at 13:04 The status quo will remain unchanged.
If I am not wrong, the “Launch Aid” as defined in the 1992 agreement is not anymore possible because the US withdrew from the agreement.
In other words, the notion of “Launch Aid” does not exist anymore.
However, I think EU governments can still provide a kind of commercial soft loan if they wish to do so. And of course there are other ways to provide help to EADS.
I don’t see any issue anymore here, especially when you know that EADS is now the world’s largest aerospace firm.
http://www.defensenews.com/story.php?i=4098157
4. Jerry1t | July 1st, 2009 at 13:56
It will be interesting to see what the WTO finally comes up with after so many years of study.
The question to my mind is whether there will be any consequences as a result of their conclusions. Is there anything that will enforceable or remediable or prescriptive .
It appears that people have almost forgotten about this matter.
Maybe one of the fallouts from the decision will be the influence it may have on the pending Tanker competition.
5. Chris Wallace | July 1st, 2009 at 14:08
I too am interested. I really don’t have a dog in this fight, but with EADS and Astrium securing more and more defense and space dollars and technologies, Airbus is now in a position to benefit from (and may already be benefiting from) the same sources they have historically claimed Boeing does to counter the Repayable Launch Aid. This somewhat strikes me as a case of “double dipping” for Airbus.
As to subsidies, yes the 787 did receive huge direct and indirect subsidies to win business, but the list of UK, French, German and Spanish cities and companies that have also received subsidies over the decades for Airbus, EADS and Astrium could probably span the North Atlantic.
6. boeing investor | July 1st, 2009 at 14:49
Boeing should not be wasting time and money on this sort of litigation.
It’s interests, that of its shareholders and airline customers would be better served if the 787 somehow managed to fly.
7. Vero Venia | July 1st, 2009 at 15:08
6. boeing investor | July 1st, 2009 at 14:49
This is not a dispute between Boeing and Airbus (or EADS).
The dispute is between the US government and the EU government.
8. ikkeman | July 1st, 2009 at 16:42
6. boeing investor | July 1st, 2009 at 14:49
7. Vero Venia | July 1st, 2009 at 15:08
Actually, the US trade Representative is litigating against aibus and the Europeean comission is litigating vs Boeing.
I’m sure our resident lawman leelaw can clarify.
For myself I don’t think the status quo will continue. I think at the very least there will be new rules and regulations to the reporting/accounting of any kind of subsidy. Also, there’ll be suggestions to both governments as to what should be allowed and what shouldn’t.
9. Vero Venia | July 1st, 2009 at 17:46
8. ikkeman | July 1st, 2009 at 16:42 “Actually, the US trade Representative is litigating against aibus and the Europeean comission is litigating vs Boeing.”
I can’t agree on that.
I think it is the US govt protests against a possible subsidy (Launch Aid) given by European govt to Airbus. The protest is not against Airbus.
Clearly, the dispute is between governments. There is not any doubt about that.
10. mikej | July 1st, 2009 at 19:18
Words like “irrelevance” and “contrary” being spoken by Boeing execs.
11. B380 | July 1st, 2009 at 20:24
Vero Venia is correct, the dispute is between the US Government and the EU Governments.
My prediction is that the WTO will find for both sides and nothing will happen. A bit like what happened between Canada and Brazil. Google for this paper:
The emergence of Japan as a subsidized competitor
in the commercial aircraft sector: the New Trade War.
It describes very well the Canada-Brazil dispute as well as the Japanese involvement in the 787 programme + WTO details.
12. Aurora | July 1st, 2009 at 20:31
Vero Venia: “I think EU governments can still provide a kind of commercial soft loan if they wish to do so. And of course there are other ways to provide help to EADS.”
I agree. Why do they persist with the RLI angle?
Jerry1t: “Maybe one of the fallouts from the decision will be the influence it may have on the pending Tanker competition.”
Spot on, Jerry1t. It didn’t play the last time because EADS didn’t announce their decision to seek government support for the A350 and the “competition” aspect had some very powerful backing,particularly John McCain and his legion of lobbist wannabes. Look for this to become an issue–not the only issue by any means–should this thing to to a “compeitition” again. “Tanker Part III” will make the last round look tame.
13. Chris Wallace | July 1st, 2009 at 20:58
Airbus persists with RLI because the 1992 agreement allowed for it to be used on future programs like the A380 and A350.
I imagine the Central Bank Rate right now is about 0%, so if you were offered billions in money with a seventeen-year repayment schedule at zero interest to fund project development, wouldn’t you take it?
I sure as heck would.
14. keesje | July 1st, 2009 at 21:25
There are 2 WTO cases & 2 parties.
I think I see only half the story.
Is the other half next?
15. Skeptic | July 1st, 2009 at 21:44
Are both parties so convinced of their position that they will risk a trade war to enforce a judgement? As Mr. Wheeldon notes, it is doubtful that the WTO has the ability to enforce any decision.
The loser gets an appeal, which will likely take years. Nothing will be resolved. I expect either party to ignore an adverse decision. What’s next? Tariffs, retaliation, counter-retaliation?
16. ikkeman | July 2nd, 2009 at 09:26
9. Vero Venia | July 1st, 2009 at 17:46
I stand corrected, see the following link and check DS316 and DS317, gov’t to gov’t
http://www.wto.org/english/tratop_e/dispu_e/dispu_subjects_index_e.htm#aircraft
If the outcome for this WTO case remains imminent for another year, as it has for the last - should the USAF delay their tanker descision?
Should they then wait for both cases to be resolved?
How much can/should the subsidy case be taken into account. Wouldn’t it only cloud the price issue. And what of Boeing’s risk???
17. JayPee | July 2nd, 2009 at 09:47
Vero Venia is being a bit deceptive when he states this is not between Airbus & Boeing. The U.S. did not start this process until Mr. Stonecipher publicly complained about launch aid to Mr. Bush during his re-election campaign. Mr Bush et al carried the ball from there.
Yes WTO is an organisation with little effective powers. Just the was the U.S. wants it. Otherwise they would be paying tons of money to Canada for their frequently recurring softwood lumber tariffs.
Even if the WTO finds against the EU (a somewhat interesting situation as the party complaining is protesting against a device to which they had agreed to back in 1992!), any tariffs need not directly be levied agains Airbus or even any other EU based aerospace industry. Considering that the U.S. will be found guilty of doling out illegal subsidies, they will probably not be so rash to start levying tariffs. What would the situation be if the EU successfully defends their case and the U.S. is found at fault? Would Ms. Murray & Mr. Dicks still insist on banning companies that are the recipients of illegals subsidies in the next tanker round?!
18. Skeptic | July 2nd, 2009 at 11:28
JayPee, the soft lumber issue between the U.S. and Canada was NOT a WTO issue; it was NAFTA.
You also say:
“Considering that the U.S. will be found guilty of doling out illegal subsidies, they will probably not be so rash to start levying tariffs.”
” The U.S. WILL be found….” How do you know this? Are you prescient?
Re-read what I said in my earlier post. Either party gets to appeal an adverse decision. This will take years. However, could Airbus risk RLI in the face of an adverse decision on the (outside IMO) chance that the verdict would be upheld on appeal?
19. Dougloid | July 2nd, 2009 at 14:07
JayPee, the soft lumber issue between the U.S. and Canada was NOT a WTO issue; it was NAFTA.
Correct, Skeptic, and the correct interpretation is that it WAS a Nafta issue that has been settled.
Now all we gotta do is figure out what to do about the pigs, the cattle and the tomatoes and the Canadian Wheat Board state monopoly.
The quickest way to drive a Canadian to distraction and raving fits is to say “Jeez, fellas. You know your government’s been selling the family jewels to the lumber and mining companies for pennies on the dollar. How’s it feel getting ripped off by your own people? But noooooooooo. Blame it on the Americans.”
20. Ed | July 2nd, 2009 at 15:22
I have always found it “unusual” that Airbus airplanes that don’t sell enough to support themselves continue on almost forever. For that, I point to 3 different EADS/Airbus airplane program. The A-380 (up to $20B US in the hole), which will never make money for the company at the current rate it is producing, the A-340-500/-600 which cannot compete in the free market against its only rival, the B-777, and the failed A-400M (currently some $5.6B US in the hole, and sinking), which even the French Senat has questioned if it will ever meet its advertised goals, and is at least 3 years behind schedule. The 16 year old A-400M program is still sitting on the ground. Who will fly first, the A-400M or the B-787? There are also ripples in the A-350 program as at this late date, the best selling version does not have a design freeze, yet.
Will the taxpayers of the various EU countries ever recoup their “investment”, or is the fact that some 40,000 Europeans that work for Airbus enough to satisfy them?
It seems that Airbus is only in terested in new airplane programs, and slow to make needed updates on exsisting airplane programs, even the successful ones. For that I point to the fact that Airbus designed an improved pitot static port and flight management prorgram for the computers for all A-330 and A-340 airplanes backe in 1994. Yet, they still built airplanes with the older and unsafe system even today. Just look at the unfortunate AF-552 accident. That A-330-200 was only 4 years old, delivered in 2005, well after the 1994 redesign of the pitot system. Was Airbus still trying to make money from airlines that bought A-330s and A-340s since 1994 by selling them the new kits after they took delivery?
In contrast, when Boeing redesigned the rudder power units on the B-737 s, they incorperated the new design into the B-737NG production line immediately, and sent repair kits to all operators of classic and NG B-737s that were built earlier.
For those who say this has nothing to do with the WTO case, you need to look again. All you have to do is follow the money for Airbus, Boeing, the US and EU governments.
21. Ed | July 2nd, 2009 at 15:28
Sorry, my mistake in referencing the tragic and recent A-330 accident. The flight was AF-442, not the typo flight number that I wrote.
22. Jacobin777 | July 2nd, 2009 at 15:35
Ed:
I don’t believe Airbus makes “faulty” planes. The A330 will need some fixes, but by enlarge, its a phenomenal plane and is the most efficient plane in its role/class.
The A333/A332 and A32X have sold amazingly well.
I think EADS/Airbus has made some bad decisions (as you mentioned) with some majour “duds”.
23. Skeptic | July 2nd, 2009 at 15:41
Correct, Dougloid. Why this soft lumber thing keeps coming up in connection with the WTO case is beyond me. Seems like someone is desperately searching for an example to make a faux point.
But here’s an example that may hold up, Bombardier & Embraer and the WTO. Do your research, kids, and see how that turned out.
24. Mike M | July 2nd, 2009 at 19:54
I’m surprised Mr MTPA hasnt waded on this topic
25. B380 | July 2nd, 2009 at 20:43
22. Jacobin777 | July 2nd, 2009 at 15:35
“The A330 will need some fixes”
What would that be?
26. Jacobin777 | July 3rd, 2009 at 02:20
@B380
Pitot tubes…;-)
27. Dougloid | July 3rd, 2009 at 04:13
Another way to get the Canucks all riled up with their undies in a bunch is to get ‘em started on the Avro Arrow or whatever it was.
Dern sure there was a yanqui plot there LOL.
28. B380 | July 3rd, 2009 at 06:41
26. Jacobin777 | July 3rd, 2009 at 02:20
Pitot tubes…;-)
1. With so much information flying around on this front, it is difficult to separate fact from hysteria. Most of what I read is hysteria.
2. A replacement of one type of the Pitot tubes has been going on for some time. To bo honest I don’t understand why Airbus decided to make Pitot tubes a customer specified item in the first place.
3. You said ‘fixes’, what else do you have in mind?
29. JayPee | July 3rd, 2009 at 10:58
Google WT/DS236, WT/DS247, WT/DS257, WT/DS264, WT/DS277 and WT/DS311. All WTO cases on softwood lumber imports concerning the US and Canada. NAFTA also played a role (as did the earlier FTA). Oh and since you got me doing some research, it seems the US will be paying back billions that they have been overcharging.
I won’t nibble on the other comments from Dougoid and Skeptic. God alone knows how much more twisted the comments would become.
Sorry for going slightly off-topic. Just wanted to use an example which I must now defend.
Skeptic, sorry. I cannot see the future. It should be, “considering the U.S. COULD be….”
Ed, care to try again? Perhaps AF 447? I see alot of junk blogs with AF442 but the news services (CNN, BBC, CBC, Reuters, Yahoo, MSNBC…..) all mention AF 447.
30. Falcon | July 3rd, 2009 at 20:14
Ed,
Quite a lot of interesting statements you make in post 20. The first of course is “Airbus airplanes that don’t sell enough to support themselves continue on almost forever. “ and then you list A380, A345/6 and A400M as examples. I really fail to understand your logic as to why any of those lines should be discontinued at this time.
They are delivering A380’s and have plenty left to deliver. Why give up the profit (NB profit not revenue) those deliveries will provide and the reduction of total program loss that will provide?
Similarly there are still outstanding orders for both A345 and A346 but for the sake of it lets say none of them will be taken up even though there has been 0ne A345 and 3 A346’s delivered this year, why cancel them before the line that is shared with the A330 is closed? It is not like there is a major cost of keeping them available in case one of the current operators like to top up. The same goes for the A343 except that are no outstanding orders and have been no deliveries this year.
Maybe it would be more appropriate to question why Boeing is keeping the 748 and 767 when they are running at slowest possible pace? Note: I think Boeing has valid reasons and is right to do it but when applying the logic you advocate I have problems understanding it.
Then the A400M. Apart from you calling a program that was launched May 27, 2003 16 years old and all the implications that would have on some of other OEM’s programs and failing to get the currency right (bigger hole) you obviously have missed all the discussions Airbus is having with the customers about if and if so how it will continue. Funny thing is that EADS and Airbus actually have real costs in this. It is not like the typical US DOD contract where the manufacturer is guaranteed a certain profit and DOD takes the cost overruns. If I remember right that is about 800 BUSD cost overrun on latest 900 BUSD awarded orders (numbers may be slightly wrong but the ratio is in close.)
Then you have the funny “There are also ripples in the A-350 program as at this late date, the best selling version does not have a design freeze, yet.“ Guess Boeing should cancel the 787 since they don’t have the 789 defined and the 78A is little more than a promise that somehow invalidate all Airbus plans and then there is the 788 that after more than 2 years delay hasn’t even flown. No I do not think those are fair arguments but I think they are equal to yours.
Then there is the UNSAFE comment that would have been funny if it wasn’t so sad. Do you really think they would allow anything that is considered UNSAFE to be delivered? Do you think FAA would allow them to deliver planes to US operators that were considered unsafe? How come Boeing hasn’t changed the electrical installation on all 747’s etc that “have caused planes to blow up”. There are plenty other cases but I will not drag them up because neither OEM will deliver planes they think are unsafe.
Saj,
How is it going with providing some info about what subsidies Airbus have received for the A380 after the initial RLI’s?
31. Dougloid | July 3rd, 2009 at 22:05
I won’t nibble on the other comments from Dougoid and Skeptic. God alone knows how much more twisted the comments would become.
JP, the only reason I brought all that stuff up is that you began by dropping the malignant softwood timber turd into what had otherwise been a typical discussion, and your commentary wasn’t even well informed.In doing so you pretty much identified your affinities. So I figger one good malignant turd deserves another.
32. Dougloid | July 3rd, 2009 at 22:09
Falcon, accordin’ to the usually reliable source du jour the A400M program has been around in one form or another since 1982. Quote:
The project began as the Future International Military Airlifter (FIMA) group, set up in 1982 by Aerospatiale, British Aerospace, Lockheed, and MBB to develop a replacement for the C-130 Hercules and Transall C-160. Varying requirements and the complications of international politics caused slow progress. In 1989 Lockheed left the grouping and went on to develop an upgraded Hercules, the C-130J Super Hercules. With the addition of Alenia and CASA the FIMA group became Euroflag.
Originally the SNECMA M138 turboprop (based on the M88 core) was selected to power the A400M. Airbus Military issued a new Request for Proposal in April 2002 which Pratt & Whitney Canada with the PW180 and Europrop International answered. Airbus Military announced, after evaluating both designs, the selection of the Europrop TP400-D6 in May 2003.
The partner nations, France, Germany, Italy, Spain, the United Kingdom, Turkey, Belgium, and Luxembourg, signed an agreement in May 2003 to buy 212 aircraft. These nations decided to charge OCCAR with the management of the acquisition of the A400M.
33. Falcon | July 4th, 2009 at 00:29
Dougloid,
How old is the C-17 program then? What about the bridge between Malmö and Københamn? Do you consider that a 100 plus year project since there was a failed attempt a building a bridge in the late 18 hundreds? How old will the new Air Force tanker be if they managed to award a contract?
Calling A400M 16 years, not that it adds up with your 1982 start date, is just a poor attempt in trying to make the technology and project look worse than it already is. Not that I understand the need to do this.
34. Leelaw | July 4th, 2009 at 09:12
Litigants in most legal fora routinely receive “barnyard justice,” at the WTO such a result is a virtual certainty. IMO, attempting to sort out which one of the pampered and protected OEMS has “cleaner hands” in these matters is truly a fool’s errand and an exercise in mental masturbation.
35. ikkeman | July 4th, 2009 at 12:26
34. Leelaw | July 4th, 2009 at 09:12
what about trying to create a new agreement on the what, how and how much of airframer subsidy? Would that be within the possibilities of the WTO?
36. B380 | July 4th, 2009 at 13:33
35. ikkeman | July 4th, 2009 at 12:26
Fully agree with that. However, the WTO cases have been filed after fruitless, lengthy negotiations to come to an agreement in the first place.
37. Jacobin777 | July 4th, 2009 at 17:06
B380:
“3. You said ‘fixes’, what else do you have in mind?”
Nothing really…
38. Leelaw | July 5th, 2009 at 00:04
“what about trying to create a new agreement on the what, how and how much of airframer subsidy?”
Considering the US government is now firmly in the hands of politicians/policymakers enamored of some aspects of euro-style socialism, including governmental “investments” in industry like RLA/I, perhaps the need for a new “agreement” will be largely obviated due to a fundamental change in public policy on this side of the pond? If RLA/I is indeed a beneficial public policy Mr. Obama may be more inclined to join in rather than resist.
39. Dougloid | July 5th, 2009 at 00:06
Falcon sez: How old is the C-17 program then? What about the bridge between Malmö and Københamn? Do you consider that a 100 plus year project since there was a failed attempt a building a bridge in the late 18 hundreds? How old will the new Air Force tanker be if they managed to award a contract?
Calling A400M 16 years, not that it adds up with your 1982 start date, is just a poor attempt in trying to make the technology and project look worse than it already is. Not that I understand the need to do this.
The lady doth protest too much methinks. You’ve got your undies in a bunch again, Falcon.
I’m interested in historical accuracy. When you use stuff like you did (the date you say the project started) to make a point, and the information’s inaccurate I’ll call you or anyone else out on it.
The C17 project was simmering on the burner from the beginning of the YC15 project. That got rolling in the late sixties, but the project was ended after the flight test program in the late seventies.
Actual development of the C17 began in the early 1980s. When I showed up in 1987 a full scale development fixture was being used to prototype parts and I spent a lot of time in and under it. I saw the first production keel beam laid, and I was there for the first flight too. I also rode the trolley down through the belly a number of times and that is why I can state with some authority how the aircraft was made-at least the parts I saw.
I don’t have any problem stating that at all, dates included. I have no opinions about the bridge between somewhere and some other place, as that is purely a local matter for Scandinavians to trade jabs about.
How many years have you worked in the A400M factory, then?
40. Falcon | July 5th, 2009 at 00:16
Ikkeman,
Kind of hard to have negotiations when the side that broke the existing agreement says that they will not enter discussions unless the result they want is guaranteed.
“U.S. officials have consistently noted their willingness to negotiate a new bilateral
agreement on large civil aircraft, even while the WTO litigation proceeds, but have
insisted that any such agreement must end launch aid and other direct subsidies for the
development and production of such aircraft.” (Emphasis added) http://ia.ita.doc.gov/esel/reports/seo2007/seo-annual-report-2007.pdf
41. Skeptic | July 5th, 2009 at 16:30
Leelaw: “If RLA/I is indeed a beneficial public policy Mr. Obama may be more inclined to join in rather than resist.”
Couldn’t agree more. This administration seems to have an affinity for industrial policy.
42. Aurora | July 5th, 2009 at 21:33
This report suggests the UK may be looking at a different tact than the usual subsid….er RLI. A plain, no frills, business loan. What a novel idea!
http://www.reuters.com/article/marketsNews/idUSL571373120090705
43. ikkeman | July 5th, 2009 at 21:35
so, trying to leave the discussion of who did what, when or where and however much - what should be the shape of any new agreement.
There used to be an agreement - just because one side decided the agreement was no longer valid doesn’t mean there wont be a new one.
I don’t think RLA/I is in itself a bad thing. Who can front the billions needed for the period required by aviation other than a gov’t. And gov’t do have a vested interest in the high skilled jobs and taxes such a program supports. But is there another, better way to achieve the same effect?
44. Erik Bloodaxe | July 6th, 2009 at 14:21
Trying to craft an agreement on Airbus subsidies is worthless effort, the EU and Airbus will never abide by the agreement anyway. Just like with the ‘92 accord. Launch aid was supposed to transition out, with the whole 33% business as a ceiling, not the floor. The INTENT of the agreement was to wean Airbus off the teat. Except the Europeans couldn’t abide by that. So here we are.
Yes, this whole WTO business is a bunch of crap, waste of time. In the end NOTHING will be done. When the Europeans are found to have violated the WTO agreements, there is nothing for the US to do but slap tarrifs on European goods, which the Americans won’t do. Same goes for the case against the US should they be found to have violated the WTO agreements. Bottom line, neither side is going to start a trade war over this crap. Laughable, it’s like two brothers fighting over the same toy. What’s more, the toy is broken.
45. Falcon | July 6th, 2009 at 14:38
Dougloid,
You claim your motivation is accuracy yet you complain over me asking for the same from Ed.
If accuracy is your goal you should have addressed his inaccurate use of 16 years as it doesn’t match the start date you suggest but more importantly is historical incorrect as a measurement of the program being in trouble which is how he used it.
Sorry but your post seems to be motivated by something else than accuracy and I don’t see you call “anyone else out on it.”
46. Steve | July 6th, 2009 at 17:29
“This report suggests the UK may be looking at a different tact than the usual subsid….er RLI.”
Amazingly, after providing Airbus with £billions of “subsidies”, as you like to describe them, those fools at Airbus insist of continuing to pay royalties on every plane built.
The UK Government is in massive profit on these “subsidies”. There should be a law against it.
47. Dougloid | July 6th, 2009 at 21:10
Attaway, Doug. Take it to ‘em.
http://www.glgroup.com/News/Who-Will-Cough-Up-for-the-Airbus-A350XWB–40940.html
48. Falcon | July 6th, 2009 at 22:43
It is easy to see why Doug had such a short stint at Airbus. Harder to see why any company would hire him, with the exemption of FOX news.
49. Aurora | July 7th, 2009 at 00:43
“The UK Government is in massive profit on these “subsidies”. There should be a law against it.”
On all programs? Would the A380 have proceeded if they had to justify the program to commercial lenders? RLI reduces RISK, that’s why they like it.
If those profits are so “massive”, why is the UK now considering a loan on commercial terms?
50. chaser | July 7th, 2009 at 05:21
I’m afraid Doug puts a whole new meaning to the word or profession of Consultant.
His rant on the A300 in that article can only be regarded as unprofessional!
51. Mike M | July 7th, 2009 at 05:38
>>>I’m afraid Doug puts a whole new meaning to the word or profession of Consultant.
His rant on the A300 in that article can only be regarded as unprofessional!
Why?
Because he asks a genuine question on how the A350 will be funded?
Sheesh, grow the FU.
52. ikkeman | July 7th, 2009 at 07:37
49. Aurora | July 7th, 2009 at 00:43
because of the WTO case???
53. Leelaw | July 7th, 2009 at 07:41
The doctrinaire “Airbusiers” will come to loathe Mr. Obama even more than they already detest their “Great Satan” Aboulafia, McVitie, G.W. Bush, and Fox News bogeymen combined, as they watch him co-opt the RLA/I ruse on behalf of Boeing.
54. Vero Venia | July 7th, 2009 at 08:56
46. Steve | July 6th, 2009 at 17:29
Since the 1992 agreement is not anymore in effect, perhaps the British, French, German and Spanish governments should stop asking those massive royalties from Airbus such that the latter can use the money for A350 development.
55. Steve | July 7th, 2009 at 12:32
“Attaway, Doug. Take it to ‘em.”
Hmm, let’s see
“not taking into account widely-anticipated service-entry delays of a further two years”
Widely-anticipated, or widely hoped-for by Madman McVitie? It seems hell hath no fury like a McVitie scorned.
56. Steve | July 7th, 2009 at 12:34
“If those profits are so “massive”, why is the UK now considering a loan on commercial terms?
You must have missed the global financial meltdown and the fact that the UK Government is in debt up to its eyeballs and still borrowing.
57. Steve | July 7th, 2009 at 12:37
“The doctrinaire “Airbusiers” will come to loathe Mr. Obama even more than they already detest their “Great Satan” Aboulafia, McVitie, G.W. Bush, and Fox News bogeymen combined, as they watch him co-opt the RLA/I ruse on behalf of Boeing.”
Go ahead, fill your boots and see if anyone actually cares. Come to that, why do so many people care how Airbus is funded?
58. keesje | July 7th, 2009 at 13:20
I think the WTO cases are worthless. Even if the EC proves Boeing received huge R&D support for decades, horrific tax cuts and blunt sales support by Im Ex and DoD, the US will not take action to stop supporting Boeing and the bigger aerospace community. Its a strategic assett, patriotic crown jewel, #1 exporter and job generator. They don’t want to stop supporting it.
59. Leelaw | July 7th, 2009 at 14:13
Is “Steve” possibly Steve Brimley, a “moderator” on Airliners.net, “slumming” on Saj’s site, doing God’s work for “Empress Airbus?”
60. Vero Venia | July 7th, 2009 at 14:34
58. keesje | July 7th, 2009 at 13:20
I agree with keesje. If the EC must stop the launch aid, there is nothing to stop European governments to do exactly what the US do. I think that’s exactly why the US pulled out from the 1992 agreement.
So what’s the problem?
http://www.defensenews.com/story.php?i=4098157
61. Aurora | July 7th, 2009 at 14:45
“You must have missed the global financial meltdown and the fact that the UK Government is in debt up to its eyeballs and still borrowing.”
No, Steve, I didn’t miss it. If anything, your statement argues for the UK to continue to pursue those “massive” profits with even more vigor via the RLI scheme.
I suspect they’re just not comfortable with the risk and want a genuine, honest-go-goodness, commercial loan that ensures they’ll be paid back on a predictable payment schedule, “massive” profits notwithstanding.
62. Jerry1t | July 7th, 2009 at 15:50
Today, England announced that it is prepared to make a LOAN to EADS for the development of the A350. The amount of the LOAN will be contingent on the amount of work that is granted to English firms.
This is a different type of arrangement that is cited in the WTO complaint and more resembles the type of financing that Boeing received on the 787
63. Falcon | July 7th, 2009 at 16:42
Jerry1t,
What similar financing did Boeing receive?
64. Erik Bloodaxe | July 7th, 2009 at 17:02
Ah, the “massive profit” smoke screen. Effective only against people who don’t read. The only launch aid that has been paid off, and now gets royalties for the Crown is the A320. A few thousand a year, hardly “massive”. The A330 was magically claimed to have been paid off just before the tanker competition started raising the question of Launch Aid. The A340 program though is still FAAAR from paid off. The A380 will NEVER be paid off, and more than likely will be forgiven. This is why the UK is more nervous this time. They have been burned too many times by Airbus promising gold but delivering shit. All the while exporting British (NOT English) jobs to Germany and Spain.
65. B380 | July 7th, 2009 at 20:18
“They have been burned too many times by Airbus promising gold but delivering shit.”
Really? Delivering shit. It’s actually quite amusing.
“All the while exporting British (NOT English) jobs to Germany and Spain.”
Can you show an example of that?
66. Paulo M | July 14th, 2009 at 22:32
The following I posted somewhere else, but this should have been it’s first home - late unfortunately.
Subsidy/research grants soapie: The way I see it is as follows - very simply: In the United States of America, there appears to be a culture of innovation, an ability to turn science into money. This culture is completely unrivalled anywhere on this very pretty blue marble - such is the bulk size of research & development in the US - far larger than number 2 & 3 combined. Now, the US government, through it’s agencies and departments, helps scientists learn stuff, develop and build stuff that the US government might like to buy. The scientists work for Boeing, and they go to school at NASA and the DoD. Now, what happens when you go to school is you learn stuff that you can use for the rest of your natural life. In this way, the excellently organised United States of America school system is perfectly legal.
The problem, however, arises when other governments can’t organise themselves as effectively as that shining light of enlightenment does over in North America - the middle part. Also, they don’t have a culture of innovation, and they don’t know how to sell anything, unless a traitor(s) aids them. Now, over here we have the European Union. It thinks that giving aid at ‘market rates’ to fund the development of a very specific - and finite - civil program/aircraft is better than developing a new technology that has positive effects far beyond aerospace. What is innovation? (But, the Europeans aren’t alone; I think the Canadians have a similar culture. Similarly, Brazil seems to be like the US - but I’ll accept WTO litigation if I got it wrong.)
Now we have the WTO decide if America is wrong for being innovative - or if Europe is wrong for prescribing pain killers for something that could go away if they only simply set up a school to foster innovative, active and healthy students.
And will the WTO make a proper judgement in this case. No. They can’t. The participating governments need to ask themselves if their current course of action is the best for the future.
67. ikkeman | July 15th, 2009 at 08:46
66. Paulo M | July 14th, 2009 at 22:32
You’ve taken the crown - I’m truely flabbergasted after reading that drible.
Bloodaxe, McVintie and keesje: you’ve been trumped.
Thank gawd for those living in the dark ages that exist beyond the US border they have the US to provide a guiding light.
Just to bad the light at the end of our tunnel appears to be shining out of your …
68. Paulo M | July 15th, 2009 at 17:56
67. ikkeman | July 15th, 2009 at 08h46
Funny thing that you speak of lights shining out on me! They did today, and the water was nearly cold by the time I got to it!
I guess I can make my point now. The point, like eveyone else here apparently sees, is this WTO business is BS. The R&D story been simmering for as long as I’ve been reading business newspapers. The WTO is unfortunately starting to look as useful as the UN. Does anyone expect these Western institutions to continue making a meaningful difference? No, and it doesn’t matter, yet.
69. Paulo M | July 15th, 2009 at 19:58
Oh yes, one last word on this WTO business. Seeing that this has been a fairly drawn out process, it’s pretty obvious where Boeing and Airbus get their inspiration for speedy, ahead of schedule, and under budget new jet programs. It’s a shocker.
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