Boeing, Airbus respond to WTO rulings, announce fleet updates
The World Trade Organization’s (WTO) Appellate Body has ruled that certain subsidies, or launch aid, provided to Airbus by European governments violate trade laws and endanger U.S. interests. Still, the WTO rejected a number of claims, including Boeing's previous assertion that it lost market share in Brazil, Mexico, Chinese Taipei and Singapore due to the aid. The expected results of the case have been known for months, but have only just now been made official.
Regardless of this finding, Boeing Chairman and CEO Jim McNerney applauds the WTO’s rulings. “This is a clear, final win for fair trade that will level the playing field for America’s aerospace workers,” he said in a statement. “The WTO has concluded that launch aid and other illegal Airbus subsidies distorted the market, harmed U.S. industry and now must end.”
Although the Appellate Body reversed the panel’s proposal that the European Union withdraw illegal subsidies within 90 days, it did rule that Airbus received $18 billion in unlawful aid (principle amounts only).
Still, Rainer Ohler, head of public affairs and communications at Airbus, considers this ruling a victory for his company. “It’s time for Boeing to accept this legal defeat and end the masquerade,” he said in a statement. “We see no significant consequences for Airbus or the European support system from today’s decision, as the WTO has now fully and finally rejected most of the U.S. claims. Therefore, the WTO findings are likely to require only limited changes in European policies and practices.”
J. Michael Luttig
Boeing Executive Vice President and General Counsel J. Michael Luttig rejected this argument, retorting: “The WTO rules, combined with the ruling in this case, give clear guidance on what governments can and cannot do to support their respective aerospace industries. These rules will govern all market participants and help ensure that competitions are won or lost based on the merits of the respective product offerings rather than on government subsidies.”
The WTO Appellate Body is also investigating the European Union’s claim that the U.S. provided subsidies to Boeing.
In other news, both Boeing and Airbus are taking measures to expand their reach in the aviation sector. In fact, Lufthansa Cargo recently confirmed an order for the procurement of five Boeing 777 freighters, valued at $1.35 billion. According to Boeing, the 777s will help Lufthansa Cargo “modernize its fleet” and reduce its environmental footprint.
Moreover, Airbus has announced that it will increase production of its A320 fleet of aircraft from 36 to 42 per month in the fourth quarter of 2012. Tom Williams, executive vice president of programs at Airbus, believes this jump in productivity will have strong implications for his company.
“The low operating costs and high dispatch reliability offered by the A320 family make it the bestseller in its market,” he said in a statement. “With a backlog of over 2,300 A320 family aircraft to deliver, we need to increase production to accommodate continuing strong customer demand for these new eco-efficient aircraft.”
