rotornut
19th May 2004, 18:05
Reuters
Boeing Still Cries Over Airbus Subsidies
Wednesday May 19, 12:05 pm ET
SEATTLE (Reuters) - Boeing Co. (NYSE:BA - News) said on Wednesday it plans to "raise the rhetoric" on jetmaker Airbus SAS's receipt of government aid, saying its European rival is sacrificing profits to build market share.
Reviving a long-running war of words, Boeing Chief Executive Harry Stonecipher told investors at a conference that "Airbus is not on a level playing field" because of state aid, including low-interest loans to develop aircraft like its new A380 mega-jet.
"They build a lot of airplanes and they've taken a lot of our market share and they say that they're making a lot of money, which I'm still trying to figure out," Stonecipher said. "But if that's true, then they don't need subsidies and they don't need to have non-commercial-rate lending."
Stonecipher did not say whether Chicago-based Boeing would push a formal complaint with U.S. trade officials.
"We are going to raise the level of rhetoric on that subject," he said. "We are going to change the playing field. Stay tuned, we'll have more to report."
Under a 1992 U.S.-European Union agreement on large aircraft, governments can fund up to 30 percent of the costs of launching a new aircraft. European governments have provided loans or guarantees for every Airbus jet, including the new A380 mega-jet.
"We do not receive subsidies. We receive funds in the form of repayable launch aid, which is in line with the applicable international trade agreements," said an Airbus spokesman in Toulouse, France.
Boeing supporters have argued that stricter World Trade Organization rules prohibit such aid, but they have never launched a formal case with the trade body.
Likewise, Airbus has long claimed Boeing gets unfair support through military contracts and NASA work that underpin research and development for its commercial planes.
Boeing also obtained $3 billion in aid from Washington state after agreeing to assemble its new 7E7 mid-sized jet near Seattle, and has reportedly received aid guarantees from Japan, where much of the component work will be done.
Airbus officials have raised questions about the Japanese support in discussions with EU officials, but say any decision to file a formal complaint rests with European governments.
Stonecipher said he doubted Airbus was profitable, citing the financial statements of parent company EADS, which owns 80 percent of Airbus.
He also called the launch of the 555-seat A380 a "mistake," reiterating Boeing's view of a limited market of about 400 jets that large over the next 20 years, compared with Airbus' forecast of several times that much demand.
"Airbus in our opinion, OK, made a mistake," he said. "They made a big mistake when they decided to build the A380." (Additional reporting by Noah Barkin in Paris)
Boeing Still Cries Over Airbus Subsidies
Wednesday May 19, 12:05 pm ET
SEATTLE (Reuters) - Boeing Co. (NYSE:BA - News) said on Wednesday it plans to "raise the rhetoric" on jetmaker Airbus SAS's receipt of government aid, saying its European rival is sacrificing profits to build market share.
Reviving a long-running war of words, Boeing Chief Executive Harry Stonecipher told investors at a conference that "Airbus is not on a level playing field" because of state aid, including low-interest loans to develop aircraft like its new A380 mega-jet.
"They build a lot of airplanes and they've taken a lot of our market share and they say that they're making a lot of money, which I'm still trying to figure out," Stonecipher said. "But if that's true, then they don't need subsidies and they don't need to have non-commercial-rate lending."
Stonecipher did not say whether Chicago-based Boeing would push a formal complaint with U.S. trade officials.
"We are going to raise the level of rhetoric on that subject," he said. "We are going to change the playing field. Stay tuned, we'll have more to report."
Under a 1992 U.S.-European Union agreement on large aircraft, governments can fund up to 30 percent of the costs of launching a new aircraft. European governments have provided loans or guarantees for every Airbus jet, including the new A380 mega-jet.
"We do not receive subsidies. We receive funds in the form of repayable launch aid, which is in line with the applicable international trade agreements," said an Airbus spokesman in Toulouse, France.
Boeing supporters have argued that stricter World Trade Organization rules prohibit such aid, but they have never launched a formal case with the trade body.
Likewise, Airbus has long claimed Boeing gets unfair support through military contracts and NASA work that underpin research and development for its commercial planes.
Boeing also obtained $3 billion in aid from Washington state after agreeing to assemble its new 7E7 mid-sized jet near Seattle, and has reportedly received aid guarantees from Japan, where much of the component work will be done.
Airbus officials have raised questions about the Japanese support in discussions with EU officials, but say any decision to file a formal complaint rests with European governments.
Stonecipher said he doubted Airbus was profitable, citing the financial statements of parent company EADS, which owns 80 percent of Airbus.
He also called the launch of the 555-seat A380 a "mistake," reiterating Boeing's view of a limited market of about 400 jets that large over the next 20 years, compared with Airbus' forecast of several times that much demand.
"Airbus in our opinion, OK, made a mistake," he said. "They made a big mistake when they decided to build the A380." (Additional reporting by Noah Barkin in Paris)