Boeing wants Airbus loans cut

[question everything]

Wednesday, September 01, 2004

Boeing wants Airbus loans cut

Bush lends support, may complain to the World Trade Organization about European Union action.
By Victoria Knight
DOW JONES NEWS

BRUSSELS, Belgium -- Trying to protect its planned 7E7 Dreamliner from competition, Boeing Co. is mounting a campaign to cut off European government loans to archrival Airbus.

(snip)

Boeing wants to prevent government loans for new aircraft so France-based Airbus can't build a rival to the 7E7 -- the first all-new aircraft the Chicago-headquartered company has designed in 15 years. Allegations of unfair subsidies have been flying for decades. But Boeing's ailing fortunes, Airbus' increasing size and success, and the impending U.S. presidential election are raising the stakes.

The market for commercial airliners has shrunk and competition tightened. Last year Airbus delivered more planes than Boeing for the first time. Boeing's sales of passenger planes have shrunk and it has laid off thousands of workers. A series of scandals has damaged its defense business, and its previous chairman resigned.

(snip)

Under a 12-year-old agreement, both the EU and United States are allowed to give some subsidies to civil aircraft makers. That pact only came after the U.S. started a suit challenging all European aid to Airbus at the WTO's predecessor, GATT, or General Agreements on Tariffs and Trade.

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Find this article at:
http://www.dailybreeze.com/business/985841.html

[LauraK]

1. We went through all this last week. Boeing gets $$BB tax breaks.

Airbus is doing so well because of anti-bush sentiment world wide. If Boeing wants a fair playing field, they better vote for Kerry.

[fortyfeetunder]

2. Well, Kerry better bring his butt to a Boeing plant!

The Boeing watchers tell me * has been to Boeing plants at least twice (Seattle, Philadelphia) in the last six months. Kerry has yet to visit any site!

[Pax Argent]

3. Hate to say it, but a defense plant might not be where

Kerry would want to go. The plant I work in is over-run by old, lazy, union guys who sit around every day and listen to Rush and friends and bitch about how they're working their asses off for the benefit of the welfare state and, inexpicably, unions promoting laziness and incompetence.

There is also an underlying belief that only Republicans want weapons systems despite the fact that Boeing did EXTREMELY well while Clinton was in office, so much so that they engulfed and devoured McDonnell-Douglas and Hughes during the nineties to ensure a steady cash-flow from military contracts due to the fact that Airbus was already on its way to eating Boeing's lunch.

Gratuitous smiley for my kid:
:)

[Kellanved]

6. not really

Airbus is doing well because the planes are better (Pilots might disagree, but it's a fact). They need less fuel and keep their lease/resell value better - in a time of rapidly rising fuel prices that's an important factor. Also it is easier to train pilots on Airbus family planes, as the cockpits are all identical (ok Boeing does that too - now).

The 7E7 is a clone of the Airbus concept. Basically it is an updated copycat plane of the A320. Airbus is currently busy with the A380 and unable to redesign the A320 (or design a completely new plane) to compete with the 7E7.
So Boeing tries to hinder Airbus in competing, while at the same time asking the US government for hidden subsidies (paid to airlines, kickback deals and government/army leased jets). Also Boeing gets open and hidden subsidies by other nations with Boeing plants - all in all outpacing the loans given to Airbus by far.

On Edit:
The 1992 treaty forbids WTO intervention, but limits the loans to 33% of new investions. In the past few years there were several attempts to reform the treaty, but all were denied by the US side. The offer given then is the same as today: stop subventions for Boeing and the EU will stop loans for Airbus.
A likely reason for Boeing feeling threatened is Airbus's expansion to the US's arms market.

[KDLarsen]

8. Wouldn't say that it's a copycat..

.. since a lot of the systems are brand new. However, Airbus have stated that they are ready to update their A330, which is basically the 7E7's greatest rival, with any new technologies that are created for the 7E7 and then sell it.

You have to remember that Airbus are notorious for giving discounts to win a bid, to such an extend that they're willing to pay for pilots conversion, spare parts, service deals etc, just to ensure that they win the bid. The easyJet A319 order comes to mind - they ordered around 100 of them, imagine if Boeing had won that one (keep in mind that easyJet had been a all-Boeing for a while). And not long after, Boeing was forced to do the exact same thing for Ryanair - a deal that made Michael O'Leary boast about how he "raped" Boeing.

And another thing, regarding the loans, I've always understood that while Airbus are indeed recieving loans, but they're also paying interests off those loans to the countries that gives them. Is Boeing doing the same?

And finally, one thing that make Airbus very popular with the airlines, is their cockpit commonality - look at the cockpit of a A320, A330 and A340 and find the greatest difference, and it's most likely going to be that the throttle on the A340 has 4 levers instead of 2! With Cross-Crew Qualification, airlines can actually use the same pilots on the A320 and A330 and have them mix between the fleets. You're not going to see that with Boeing (apart from the 757 and 767).

EDIT: And don't forget that Airbus themselves have stated that they're willing to drop the loans from the countries, provided that Boeing does the same (and the USAF invites Airbus and Boeing to a new round of talks over the new tanker deal).

[Kellanved]

9. ok, a little too harsh

My point was that it it is not a brand-new never-seen-before concept.

We seem to agree on pretty much everything else ;-).

:hi:

On Edit: yes, Airbus has to pay interest on the loans.

[KDLarsen]

10. Now we pretty much agree on all of it..

.. IIRC, the 7E7 was made up to be a revolution of the airline industry etc., but it's looking less & less likely that it's not going to be.

[Florida_Geek]

4. Boeing want out of the commerical market

After buying McDonnell-Douglas and putting the leaders of MD in leadership position with Boeing, all they wanted was the Military $$$$$. Boeing does not want to compete in the commerical aircraft world any more IMHO...

[RivetJoint]

5. Then why are they building the 7E7??

And asking that Airbus stop being given Govt payments?

[slojim240]

7. But I thought that our system worked?

You mean that capitalism can't compete?