US Government interference
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US Government interference
CNN tonight is running an artical about China Airlines and there intention to purchase some more A330's. Things must be getting tough at Boeing when they have to openly use US political pressure to encourage another Government to then encourage one of their local airlines to change an aircraft order. CAL already operates A330/340's, so the last thing they want is another type that does the same job less efficiently.
I realise the aircraft manufacturing industry is suffering at the presant, but is it right that political interference should be used to prop up a private company like this. Maybe it is an early sign that there is more trouble at Boeing than we are led to believe.
Have a nice day
I realise the aircraft manufacturing industry is suffering at the presant, but is it right that political interference should be used to prop up a private company like this. Maybe it is an early sign that there is more trouble at Boeing than we are led to believe.
Have a nice day
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Actually CAL only operates the A340 now and regardless of what decision is taken, it intends to dispose of the A340, which is apparently considers too small for its needs.
No A330s are operated, so a new type could be introduced; SIA is replacing its A310s with 777s, so it wouldn't necessarily be unreasonable for 777s to replace A300s and the 777 would work as a multi-role aircraft: standard aircraft as A300 replacements and ERs for long haul flights. However, a combination of orders is still possible, with an order being split between A330s and 777s; no doubt European governments are lobbying fiercely.
Still, one can't blame Airbus for feeling pretty miffed. Still, EVA is expected to drop the 777LR (being the sole customer) and move back to the A340-500; it is already a 332 customer.
No A330s are operated, so a new type could be introduced; SIA is replacing its A310s with 777s, so it wouldn't necessarily be unreasonable for 777s to replace A300s and the 777 would work as a multi-role aircraft: standard aircraft as A300 replacements and ERs for long haul flights. However, a combination of orders is still possible, with an order being split between A330s and 777s; no doubt European governments are lobbying fiercely.
Still, one can't blame Airbus for feeling pretty miffed. Still, EVA is expected to drop the 777LR (being the sole customer) and move back to the A340-500; it is already a 332 customer.
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An article ran in Flight the other week with this story. Apparently, it revolved around the US government threating to withdrawing military aid to Taiwan if Airbus aircraft were purchased instead of Boeings.
Just don't start talking about a fair and level playing field.
Just don't start talking about a fair and level playing field.
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Related to 411A's comment, here's what the U.S. Trade Representative says about Airbus in its 2001 report on European Union Trade:
"Since the inception of Airbus in 1967, the Airbus member governments have provided massive direct subsidies to their respective member companies to aid in the development, production and marketing of the Airbus family of large civil aircraft. These subsidies have enabled Airbus to garner approximately 50 percent of new orders over the last three years. According to Airbus’ Chief Executive, Airbus “is now established on a par with its competitor.” The Airbus partner governments have borne a large portion of the development costs for all major lines of Airbus aircraft and provided other forms of support, including equity infusions, debt forgiveness, debt rollovers and marketing assistance, including political pressure on purchasing governments. They have also provided funds to support the development of derivative versions of earlier Airbus aircraft models, such as the A330-200 and the A340-500/600. Some loans for Airbus programs, repayable from royalties on aircraft sold, have been effectively forgiven because projected sales did not materialize.
The Airbus governments continue to subsidize their member companies. On March 10, 2000, the British government announced a commitment of 530 million pounds sterling to underwrite BAE System’s participation in the development of the wings for a new Airbus project, the A380 “superjumbo’ aircraft. The German government has made a political commitment to provide 200 million DM in support for A380 development. The French and Spanish governments have indicated that they are likely to extend A380 funding to their producers as well. European officials have claimed that Member States’ support will be in compliance with the 1992 bilateral Agreement on Large Civil Aircraft; however, the United States believes that government support of Airbus raises serious concerns about Member State adherence to their bilateral and multilateral obligations in this sector, including the 1995 WTO Agreement on Subsidies and Countervailing Measures (SCM). It has urged the Airbus governments to ensure the terms and conditions of their support for the A380's development are consistent with commercial terms, reflecting the fact that Airbus is now a highly competitive global producer of aircraft. Discussions on this issue are expected to continue in early 2001.
Government Support for Airbus Suppliers
Belgium: The government of Belgium and Belgian regional authorities are reported to subsidize Belgian aircraft component manufacturers, which supply parts to Airbus Industrie. In November 2000, the Belgian federal government reached an agreement with the three regional governments responsible for aviation research and development on a BF 7.9 billion (USD 170 million) package for the development and pre-financing of the new Airbus A380. The Belgian government states that it has discontinued an earlier Belgian exchange rate subsidy program which appeared to be similar to a German foreign exchange rate guarantee program that a GATT panel found to be a prohibited export subsidy. The United States has raised this matter in the WTO Agreement on Trade in Civil Aircraft and has also posed questions to the EU under provisions of the SCM which permit member countries to seek and obtain information on the nature of a practice maintained by another member and to clarify why it may not have been notified to the WTO as a subsidy. The EU did not provide substantive answers to the U.S. questions, but stated that Belgium had decided to introduce a new industrial policy, the precise mechanisms of which have yet to be finalized.
United Kingdom: On February 13, the British government announced it would provide up to BPS 250 million in “investment” for Rolls Royce to develop the Trent 600 and 900 engines. The former is to be used in the Boeing 747X and longer range 767-400 ER. The latter engine is to be used on the Airbus A380. This development aid is subject to European Commission review, and while the Commission’s review is ongoing, the United States will be analyzing the effects of this support."
"Since the inception of Airbus in 1967, the Airbus member governments have provided massive direct subsidies to their respective member companies to aid in the development, production and marketing of the Airbus family of large civil aircraft. These subsidies have enabled Airbus to garner approximately 50 percent of new orders over the last three years. According to Airbus’ Chief Executive, Airbus “is now established on a par with its competitor.” The Airbus partner governments have borne a large portion of the development costs for all major lines of Airbus aircraft and provided other forms of support, including equity infusions, debt forgiveness, debt rollovers and marketing assistance, including political pressure on purchasing governments. They have also provided funds to support the development of derivative versions of earlier Airbus aircraft models, such as the A330-200 and the A340-500/600. Some loans for Airbus programs, repayable from royalties on aircraft sold, have been effectively forgiven because projected sales did not materialize.
The Airbus governments continue to subsidize their member companies. On March 10, 2000, the British government announced a commitment of 530 million pounds sterling to underwrite BAE System’s participation in the development of the wings for a new Airbus project, the A380 “superjumbo’ aircraft. The German government has made a political commitment to provide 200 million DM in support for A380 development. The French and Spanish governments have indicated that they are likely to extend A380 funding to their producers as well. European officials have claimed that Member States’ support will be in compliance with the 1992 bilateral Agreement on Large Civil Aircraft; however, the United States believes that government support of Airbus raises serious concerns about Member State adherence to their bilateral and multilateral obligations in this sector, including the 1995 WTO Agreement on Subsidies and Countervailing Measures (SCM). It has urged the Airbus governments to ensure the terms and conditions of their support for the A380's development are consistent with commercial terms, reflecting the fact that Airbus is now a highly competitive global producer of aircraft. Discussions on this issue are expected to continue in early 2001.
Government Support for Airbus Suppliers
Belgium: The government of Belgium and Belgian regional authorities are reported to subsidize Belgian aircraft component manufacturers, which supply parts to Airbus Industrie. In November 2000, the Belgian federal government reached an agreement with the three regional governments responsible for aviation research and development on a BF 7.9 billion (USD 170 million) package for the development and pre-financing of the new Airbus A380. The Belgian government states that it has discontinued an earlier Belgian exchange rate subsidy program which appeared to be similar to a German foreign exchange rate guarantee program that a GATT panel found to be a prohibited export subsidy. The United States has raised this matter in the WTO Agreement on Trade in Civil Aircraft and has also posed questions to the EU under provisions of the SCM which permit member countries to seek and obtain information on the nature of a practice maintained by another member and to clarify why it may not have been notified to the WTO as a subsidy. The EU did not provide substantive answers to the U.S. questions, but stated that Belgium had decided to introduce a new industrial policy, the precise mechanisms of which have yet to be finalized.
United Kingdom: On February 13, the British government announced it would provide up to BPS 250 million in “investment” for Rolls Royce to develop the Trent 600 and 900 engines. The former is to be used in the Boeing 747X and longer range 767-400 ER. The latter engine is to be used on the Airbus A380. This development aid is subject to European Commission review, and while the Commission’s review is ongoing, the United States will be analyzing the effects of this support."
Last edited by Eboy; 28th Aug 2002 at 02:24.
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Eboy
And you believe the "U.S. Trade Representative". Yeh right????
Over the years I have learnt to disbelieve everything that comes out of the US regarding trade and competition. They simply don't know how to be honest and fair with any other country with anything be it aircraft, wheat, steel or any commodity.
The quote you put forward is what I would expect them to say.
Considering the serious downturn in the US market where Boeing sells most of its aircraft and the recent high number of cancellations and postponements that has mainly affected Boeing, what rabbit has illuded to regarding the state of the health of the Boeing Company might be the reason that this sort of pressure is now required to prop up the company.
And you believe the "U.S. Trade Representative". Yeh right????
Over the years I have learnt to disbelieve everything that comes out of the US regarding trade and competition. They simply don't know how to be honest and fair with any other country with anything be it aircraft, wheat, steel or any commodity.
The quote you put forward is what I would expect them to say.
Considering the serious downturn in the US market where Boeing sells most of its aircraft and the recent high number of cancellations and postponements that has mainly affected Boeing, what rabbit has illuded to regarding the state of the health of the Boeing Company might be the reason that this sort of pressure is now required to prop up the company.
Everything is under control.
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It is not just the U.S. Trade Representative saying that. It is Airbus. For example, if you go to www.airbus.com and search "A380" in the Press Release section, you will find a 19 December 2000 release saying that "Several European governments have indicated their intention to invest in the A380 programme. Government commitments are expected to follow the signature on industrial agreements in 2001."
The Economist magazine (a U.K. publication) states, regarding the A380 program, "The company has had some controversial help in getting this far. The British, French, German and Spanish governments have chipped in $4 billion in development loans repayable from sales revenues. " (See "Towards the wild blue yonder", 25 April 2002)
The Economist magazine (a U.K. publication) states, regarding the A380 program, "The company has had some controversial help in getting this far. The British, French, German and Spanish governments have chipped in $4 billion in development loans repayable from sales revenues. " (See "Towards the wild blue yonder", 25 April 2002)
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I think the USA doth protest too much. What about the 'buy American' rules in the USA, as highlighted by the STAR 21 report recently:
"Due to restrictive rules which are embedded in many individual pieces of legislation at both federal and state level, such as the Defense Federal Acquisition Regulations, the US market is difficult to access. In practice this reflects a 'Buy American' policy."
"In 2001 US Congress approved legislations in which it explicitly limited the procurement choice of the Department of Defense to commercial Boeing aircraft...this piece of legislation would effectively exclude the purchase of an Airbus air tanker even if the enterprise offered a competitive product."
"Due to restrictive rules which are embedded in many individual pieces of legislation at both federal and state level, such as the Defense Federal Acquisition Regulations, the US market is difficult to access. In practice this reflects a 'Buy American' policy."
"In 2001 US Congress approved legislations in which it explicitly limited the procurement choice of the Department of Defense to commercial Boeing aircraft...this piece of legislation would effectively exclude the purchase of an Airbus air tanker even if the enterprise offered a competitive product."
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Eboy
There is a huge difference in investing in a project and subsidising a project. Likewise "development loans repayable from sales revenues" can hardly be described as a subsidy. In the startup days I aggree, airbus was subsidised just like you would if you were setting up a Company. I infact just did the same personally when I kicked in more than $M1 to get my new Company up and running. But I now expect it to return the investment. Airbus now say the same, Various Governments and Companies have invested in the projects. Boeing in fact does the same. Check on who financed the 777.
Wino
Correct me if I am wrong but didn't France sell Taiwan, some ships and/or fighter aircraft a few years ago? I seem to remember the Chinese getting upset about something. If I am right the its not only the US that are friendly.
Havea nice day
There is a huge difference in investing in a project and subsidising a project. Likewise "development loans repayable from sales revenues" can hardly be described as a subsidy. In the startup days I aggree, airbus was subsidised just like you would if you were setting up a Company. I infact just did the same personally when I kicked in more than $M1 to get my new Company up and running. But I now expect it to return the investment. Airbus now say the same, Various Governments and Companies have invested in the projects. Boeing in fact does the same. Check on who financed the 777.
Wino
Correct me if I am wrong but didn't France sell Taiwan, some ships and/or fighter aircraft a few years ago? I seem to remember the Chinese getting upset about something. If I am right the its not only the US that are friendly.
Havea nice day
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Well, Rabbitt, I didn't know about the 777.
Anyway, if there are no revenues (profits) on the A380, nothing needs to be paid back, as I understand the terms of the loan. You or I can fund our own businesses with our own money. If we don't do well, we lose. If the A380 does not do well, the public loses.
Anyway, if there are no revenues (profits) on the A380, nothing needs to be paid back, as I understand the terms of the loan. You or I can fund our own businesses with our own money. If we don't do well, we lose. If the A380 does not do well, the public loses.
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WINO
The U.S. is so busy sucking up to China, do you really think that, if it came to it, they would defend Taiwan !?!?
They didn't defend Tibet many years ago - but then they don't have oil!
The U.S. is so busy sucking up to China, do you really think that, if it came to it, they would defend Taiwan !?!?
They didn't defend Tibet many years ago - but then they don't have oil!
