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Boeing blasts Germany over Airbus loan

US aerospace giant Boeing lashed out Monday at Germany's plans for a multibillion-euro loan to develop Airbus's A350 airliner, ahead of a WTO ruling on EU aid to its European arch-rival.

Boeing blasts Germany over Airbus loan
Photo: DPA

With a final World Trade Organization ruling on US accusations of unfair EU subsidies expected as early as Tuesday, Boeing criticized the German government’s move to provide €1.1 billion toward the development of the A350.

“On the eve of such an important decision, it is unfortunate and disappointing to see news reports quoting a senior German official saying that Germany is prepared to provide €1.1 billion for the development of the Airbus A350 – a move that flies in the face of both the expected WTO decision and the rules-based global trading system we’ve all endorsed,” Ted Austell, vice president of Boeing’s executive, legislative and regulatory affairs, said in a statement.

A senior German economic ministry official said Sunday that the government was ready to grant a €1.1 billion loan to develop the A350 passenger aircraft.

“As far as we are concerned all pre-conditions have been met and the funds are available,” said Peter Hintze, parliamentary state secretary at the ministry of economics, in a statement implying that the conditions were in line with WTO rules.

Airbus, a division of the European Aeronautic Defence and Space Company (EADS), intends to launch the A350 as a rival to Boeing’s new 787 Dreamliner.

The €12 billion program is supported by four partner nations: Britain, France, Germany and Spain.

France has announced support of €1.4 billion and Britain is contributing €400 million. The Spanish government remains in discussions with Airbus over its funding offer but reports say it could be around €300 million.

Boeing’s Austell also referred to reports of Airbus calling for a negotiated settlement ahead of the WTO ruling.

It is “curious, although not unexpected” to see such reports only 24 hours before the ruling, he said.

On Monday, Rainer Ohler, a spokesman for the France-based Airbus, urged the US and EU to enter negotiations to find “a system that satisfies everyone.”

The WTO treats disputes at the government level, and the Boeing-Airbus case pits the US against the 27-nation EU.

“As US officials have repeatedly made clear, there’s a place for negotiations, but not on programs and actions declared inconsistent with WTO obligations,” Austell said.

“Illegal European subsidies have done great harm to the US aerospace industry. It’s time to level the playing field and let companies compete on product, price, innovation, and customer support without market-distorting government subsidies.”

Some analysts believe a clear-cut WTO judgment was unlikely given the complexity of the case.

The US filed the WTO complaint in October 2004, alleging that an accord that allowed the EU to provide up to a third of development costs of new airliners was no longer valid since Airbus was now a major industry player and not the fledgling firm when the deal was struck.

The EU has also filed a complaint against the US on multibillion-dollar state aid to Boeing. A first interim ruling in that case is due to be delivered in June, according to the WTO.

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AIRBUS

Airbus job cuts to hit Germany hardest

German Economy Minister Peter Altmaier on Wednesday urged plane builder Airbus to spread the pain fairly as it cuts 15,000 jobs to deal with lower orders following the coronavirus pandemic.

Airbus job cuts to hit Germany hardest
An Airbus plane departing Leipzig's airport on Wednesday for Rhodes, Greece for the first time since the start of the corona crisis. Photo: DPA

Just like airline giant Lufthansa, which Berlin has stepped in to save with €9 billion of taxpayer cash, “we have an interest that (Airbus) survives the crisis undamaged,” Altmaier said.

Nevertheless, “we assume that the restructuring will proceed in a way that does not favour any country nor disadvantage any country,” he added.

 

The company had said Tuesday its cuts would fall most heavily on Europe's top economy, with 5,100 positions to go compared with 5,000 in France, 1,700 in Britain and 900 in Spain.

Some 45,600 of Airbus' roughly 135,000 employees worldwide work in Germany, compared with 49,000 in France — meaning the German share of the planned layoffs is higher than the French.

Altmaier also recalled that Berlin was investing around €1 billion in developing quieter low-emissions aircraft, with Airbus among companies eligible for the funds.

Paris reacted more forcefully Tuesday, with the economy ministry blasting the planned Airbus cuts as “excessive” and urging limits on forced departures.

Company bosses have said they will discuss with unions how to achieve the job reductions, with measures including voluntary departures, early retirement, and long-term partial unemployment schemes all on the table.

On Wednesday, Germany partially restarted its travel and tourism industry again. The worldwide travel warning is being lifted for all EU member states as of Wednesday, although a travel warning remains in place for 130 countries until at least August 31st.

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