The Airbus Integrated Company - a partnership of the French-German-Spanish European
Aeronautic, Defense, and Space Company (EADS-80 percent equity share) and the UK’s
BAE Systems (20 percent equity share) - is the second largest aerospace company in the world. With about half the new aircraft sales worldwide over the last few years, Airbus is a mature company that should face the same commercial risks as its global com petitors.
Since the inception of Airbus in 1967, the governments of France, Germany, Spain and
the UK have provided direct subsidies to their respective Airbus member companies to aid in the development, production and marketing of Airbus civil aircraft. Airbus member
governments have borne a large portion of the development costs for all Airbus aircraft
models and provided other forms of support, including equity infusions, debt forgiveness,
debt rollovers and marketing assistance, including political and economic pressure on
purchasing governments. The United States therefore is concerned about the prospect for
further subsidization of Airbus by EU Member States governments. Any distortions caused by illegal subsidies would only exacerbate an already difficult situation for the large civil aircraft industry, which is facing significant losses in the wake of the terrorist attacks of September 11, 2001 as well as a cyclical down turn of the economy.
In 2001, the EU announced that seven of the nine EU Member State governments that have companies participating in the Airbus A380 superjumbo airliner project have committed a total of $3.1 billion to Airbus for the development of the aircraft, the total cost of which is estimated to be $12 billion. France has committed to provide 1.213 billion Euro in reimbursable advances. The German government has committed to provide 1 billion euro in loans.
The British government announced a commitment of 530 million pounds to underwrite
BAE System’s participation in the project. The repayment terms and interest rates for these loans are not expected to be equivalent to those available from private lenders. The loan repayment obligations are to be success dependent, which means they are repayable only through royalties on aircraft sold, and at interest rates that do not reflect the commercial risks involved. In addition, the city of Hamburg is spending
some 750 million euro to lengthen the runway and expand the facilities for Airbus at the EADS Hamburg-Finkenwerder airport to accommodate the expansion of EADS Airbus assembly there,including that of the A380. French national and local authorities plan to provide 46 million euro($45.8 million) in aid for road expansion and facility
construction for Airbus in Toulouse. These government funds appear to constitute
production support for the manufacture of the A380. Furthermore, the EU’s aeronautics
research programs are driven significantly by a policy intended to enhance the international competitiveness of the European civil aeronautics industry. Through these
research programs, the EC and many of the Airbus member governments have
provided additional funding worth billions of dollars to support the development of Airbus aircraft programs, including the A380.
European officials claim that Member State support is in compliance with the 1992 U.S.-EU Agreement on Large Civil Aircraft. However, the United States believes that government support to Airbus raises serious concerns about the Member States’ adherence to their bilateral and multilateral obligations, including the WTO
Agreement on Subsidies and Countervailing Measures (SCM Agreement). The United States has urged the Airbus member governments to ensure that the terms and conditions of their A380 support are consistent with commercial terms, reflecting both their international obligations and the fact that Airbus is now a highly competitive global producer of aircraft. The United States also believes increased transparency regarding government support to large civil aircraft manufacturing will contribute to better understanding and could foster greater cooperation in the aerospace industry.
The Government of Belgium and Belgian regional authorities subsidize Belgian
aircraft component manufacturers (operating as the Belairbus/Flabel consortium), which supply parts to the Airbus Integrated Company. In November 2000, the Belgian federal
government reached an agreement with the three regional governments responsible for
aviation research and development on a Euro 195 million ($195 million) package for the
development and prefinancing of components for the new Airbus A380. Since then,
Belairbus has already received orders worth $1.3 billion for the A380 from Airbus.
Although the regional governments of Wallonia, Flanders and Brussels are usually responsible for industrial assistance, this authority has been ceded to the national level for the A 380 project. There is concern that these subsidies may be in violation of the U.S.-
EU 1992 Agreement on Trade in Large Civil Aircraft and/or the WTO subsidies agreement. The Government of Belgium states that they have discontinued an earlier Belgian exchange rate subsidy program which appeared to be similar to a foreign exchange rate guarantee program provided by the German government for its Airbus partner company and its suppliers.
In addition to the 1.213 billion Euro in reimbursable advances for development of the
Airbus A380 super-jumbo aircraft, the Government of France will provide an additional 59 million Euros ($58.8 million) in reimbursable advances to other aero-structure
companies, which have concluded partnership agreements with Airbus for development of the airframe. Further, the government-owned French engine manufacturer SNECMA will receive 102 million Euros ($101.6 million) in support under a royalty-based system authorized by the European Commission for SNECMA’s development work on a family of large engines, including its participation in the Engine Alliance (a joint venture between General Electric Aircraft Engines and Pratt and Whitney). The French Government states that this support for engine development is not covered by the U.S.-EU 1992 Agreement on Trade in Large Civil Aircraft.
Leskova From Germany, joined Oct 2003, 6075 posts, RR: 69
Reply 4, posted (11 years 3 months 3 weeks 9 hours ago) and read 2603 times:
... but since, as of yet, the US Government (or those that want to be part of it) has only used subsidies for Airbus in election speeches, but not in any actions at the WTO that I know of, I guess you could consider it somewhat doubtful even the US really considers them as subsidies...
Steph001 From Germany, joined Oct 2003, 315 posts, RR: 0
Reply 6, posted (11 years 3 months 3 weeks 7 hours ago) and read 2550 times:
I suggest that the thread is not deleted, but I will also ask how is Boeing aided by the US government. I think it is fair to compare subsidies for both companies, since it's our money that goes there.
Andreas From Germany, joined Oct 2001, 6104 posts, RR: 30
Reply 7, posted (11 years 3 months 3 weeks 7 hours ago) and read 2527 times:
Steph, this has been discussed since years, without any results coming up except flame wars, and the reason is: nobody here knows exactly what is going on, ABSOLUTELY NO ONE!!! ...even if some here try to tell you they do!
In the case of Boeing, if there is cross-subsidizing, you have no way of proving it, if there are governmental subsidies by military deals, you can't prove nothing because you don't know the calculation, and you never will and even then it would be hard to prove anything because usually you have no comparables!
767Lover From , joined Dec 1969, posts, RR:
Reply 11, posted (11 years 3 months 2 weeks 6 days 20 hours ago) and read 2208 times:
For God's sake, I was asking a legitimate question because my father (who tends to think he knows it all) started to get into an argument with me about Boeing and he was saying Airbus is no longer subsidized and I was trying to get my facts straight from the Euros on this board.
Leskova From Germany, joined Oct 2003, 6075 posts, RR: 69
Reply 13, posted (11 years 3 months 2 weeks 6 days 20 hours ago) and read 2185 times:
767Lover, I guess it's just the fact that using the words "Airbus" and "subsidies" in the same post will always start an A/B-war... lot's of people around here will agree with your father, a lot won't...
I know I'll probably draw heat for this suggestion, but I guess it might be better to try emailing EADS and/or Airbus to get some infos from them...
Around here, these subjects just unleash too many emotions...