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The End Of Airbus 'Launch Aid' As We Know It?  
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4823 times:

The British Government apparently wants to make straight repayable loans to Airbus from now on. The USA would probably have no objection to that, if the loans were at market interest rates:-

"The Government wants to structure any launch aid for the A350, the new plane being built by Airbus, the aerospace giant, as a straight loan and less like a subsidy.

"The move would be the first time that the Government has provided state aid in such a way. In the past, so-called "repayable launch investment" for the aerospace giant has been in the form of an interest-bearing loan that only had to be repaid if the aircraft was a sales success. The Government would also receive royalties on the sales of the aircraft.

"Earlier this year, Airbus asked the Government for £379m of support to help develop the 250-seat aircraft which will rival Boeing's 787, the US company's first new aircraft in a decade.

"A move to structure the aid as a straight loan would probably help to calm US concerns that Airbus is receiving unfair state subsidies. Last week, the US rebuffed an offer by Airbus' parent companies - EADS and BAE Systems - to delay using state support to build the A350 for more than a year. The US said it would continue with its case against Airbus subsidies at the World Trade Organisation."


http://www.telegraph.co.uk/money/mai...t=/money/2005/10/09/ixcitytop.html


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
34 replies: All unread, showing first 25:
 
User currently offlineFlying-Tiger From Germany, joined Aug 1999, 4166 posts, RR: 36
Reply 1, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4811 times:

Let the WTO rule... oh sorry, forgot - any negative outcome for the US won´t be accepted.


Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
User currently offlineScbriml From United Kingdom, joined Jul 2003, 12780 posts, RR: 46
Reply 2, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4803 times:
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Quoting NAV20 (Thread starter):
The move would be the first time that the Government has provided state aid in such a way. In the past, so-called "repayable launch investment" for the aerospace giant has been in the form of an interest-bearing loan that only had to be repaid if the aircraft was a sales success.

That doesn't quite seem to be how the EU says the launch loans work:
http://europa.eu.int/rapid/pressRele...&aged=0&language=EN&guiLanguage=en

Quote:
Airbus pays royalties to governments over the entire life of the aircraft programs. Interest and principal is repaid on deliveries, even before the programs break-even and irrespective of the sale price

So, which is it?



Time flies like an arrow, but fruit flies like a banana!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 3, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4794 times:

Uncle Sam wouldn't mind loans at market rates. Looks like this is the 'compromise' to end the row.


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineArt From United Kingdom, joined Feb 2005, 3387 posts, RR: 1
Reply 4, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4780 times:

Quoting NAV20 (Thread starter):
The British Government apparently wants to make straight repayable loans to Airbus from now on.

Good. Make a loan that's a loan, rather than advancing funds on a non-loan basis while calling them a loan. Any chance of this ending the A v B funding fiasco?


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 5, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4763 times:

I'd think so, Art. In my experience the British Civil Service doesn't 'leak' things in such detail until they're pretty well settled. And Mandelson is dead keen to patch things up with the US.


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineMaersk737 From Denmark, joined Feb 2004, 715 posts, RR: 1
Reply 6, posted (9 years 1 month 1 week 6 days 6 hours ago) and read 4747 times:

Quoting Flying-Tiger (Reply 1):
Let the WTO rule... oh sorry, forgot - any negative outcome for the US won´t be accepted.

Of course not.....USA is the only "Superpower" we have left...They can do whatever they want, and we can't do anything about it......

Cheers

Peter



I'm not proud to be a Viking, just thankfull
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 7, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4735 times:

What is wrong with straight loans, Maersk737? Seems a good solution to me?


"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineMaersk737 From Denmark, joined Feb 2004, 715 posts, RR: 1
Reply 8, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4707 times:

Quoting NAV20 (Reply 7):
What is wrong with straight loans, Maersk737? Seems a good solution to me?

There is nothing wrong with straight loans, I actually have some myself Big grin

Cheers

Peter



I'm not proud to be a Viking, just thankfull
User currently offlineRichardPrice From , joined Dec 1969, posts, RR:
Reply 9, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4702 times:

Quoting Art (Reply 4):
Make a loan that's a loan, rather than advancing funds on a non-loan basis while calling them a loan

So, what makes the current loans not loans? They have to be paid back, check, they have interest applied, check, theres a maximum repayment term, check. There seems to be a lot of confusion on this forum as to what Airbus actually gets, and this common one where Airbus dont have to repay the loans if not successful is something that has never had any evidence shown for it - as far as I can make out, Airbus start repaying the loans from the initial airframe delivered, and have to meet certain targets for percentage paid back. Certainly sounds like they have to pay the loans back regardless.


User currently offlineLuisca From , joined Dec 1969, posts, RR:
Reply 10, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4679 times:

Quoting Flying-Tiger (Reply 1):
Let the WTO rule... oh sorry, forgot - any negative outcome for the US won´t be accepted.



Quoting Maersk737 (Reply 6):
Of course not.....USA is the only "Superpower" we have left...They can do whatever they want, and we can't do anything about it......

And the EU has never ever ignored a WTO ruling, please give me a BREAK
Do you forget that there are millions of people unemployed in latin america becouse the EU imposed an unfair tariff on Bananas to help their colonies??????????? Did you just suddenly forget that? The EU has continually ignored rulings that say the tarif is illegal, meanwhile in central and south america entire towns are unemployed becouse of this practice. Oh but I forgot, everything the EU does is by divine inspiration and must be followed by us ignorant brain washed Bush loving Americans.


User currently offlineScbriml From United Kingdom, joined Jul 2003, 12780 posts, RR: 46
Reply 11, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4675 times:
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Quoting RichardPrice (Reply 9):
There seems to be a lot of confusion on this forum as to what Airbus actually gets, and this common one where Airbus dont have to repay the loans if not successful is something that has never had any evidence shown for it - as far as I can make out, Airbus start repaying the loans from the initial airframe delivered,

Bang on! As per post #2

That doesn't quite seem to be how the EU says the launch loans work:
http://europa.eu.int/rapid/pressRele...&aged=0&language=EN&guiLanguage=en

Quote:
Airbus pays royalties to governments over the entire life of the aircraft programs. Interest and principal is repaid on deliveries, even before the programs break-even and irrespective of the sale price



Time flies like an arrow, but fruit flies like a banana!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 12, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4668 times:

Quoting RichardPrice (Reply 9):
Certainly sounds like they have to pay the loans back regardless.

If so, RichardPrice, Airbus will agree to the British proposal and the row will be over.

If, on the other hand, they go on arguing, it lends support to the view that launch aid has advantages that ordinary loans don't have.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineMaersk737 From Denmark, joined Feb 2004, 715 posts, RR: 1
Reply 13, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4664 times:

Quoting Luisca (Reply 10):
And the EU has never ever ignored a WTO ruling, please give me a BREAK
Do you forget that there are millions of people unemployed in latin america becouse the EU imposed an unfair tariff on Bananas to help their colonies??????????? Did you just suddenly forget that? The EU has continually ignored rulings that say the tarif is illegal, meanwhile in central and south america entire towns are unemployed becouse of this practice. Oh but I forgot, everything the EU does is by divine inspiration and must be followed by us ignorant brain washed Bush loving Americans.

All that, does not change the fact that USA, can do whatever they want  Wink

Cheers

Peter



I'm not proud to be a Viking, just thankfull
User currently offlineLuisca From , joined Dec 1969, posts, RR:
Reply 14, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4656 times:

Quoting Maersk737 (Reply 13):
All that, does not change the fact that USA, can do whatever they want

Now thats a smart reply, for a five year old  sarcastic 


User currently offlineMaersk737 From Denmark, joined Feb 2004, 715 posts, RR: 1
Reply 15, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4655 times:

Quoting Luisca (Reply 14):
Now thats a smart reply, for a five year old

You are attacking me....Why? I only stated that USA is a Superpower, and therefore sit right on the top of the world.

Cheers

Peter



I'm not proud to be a Viking, just thankfull
User currently offlineRichardPrice From , joined Dec 1969, posts, RR:
Reply 16, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4650 times:

Quoting NAV20 (Reply 12):
If, on the other hand, they go on arguing, it lends support to the view that launch aid has advantages that ordinary loans don't have.

Well, based on recent activities, Airbus, EADS and the EU have done the opposite of arguing, what with forgoing launch aid for the A350 despite it being available, and now this alternative plan, while the US have done nothing but firm up their stance with each concession on the EU side. Anyone would think that the US wants to see an all out war in the WTO over this rather than actually resolve the situation.


User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 17, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4626 times:

RP, the article says,
"A move to structure the aid as a straight loan would probably help to calm US concerns......."

I tend to read that as 'unattributable' Civil Service code for, '"We've run the idea past the Yanks and they've agreed to drop the WTO case if we do it this way......"

I believe Mandelson met with his US opposite number last week?



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineArt From United Kingdom, joined Feb 2005, 3387 posts, RR: 1
Reply 18, posted (9 years 1 month 1 week 6 days 5 hours ago) and read 4616 times:

Quoting RichardPrice (Reply 9):
So, what makes the current loans not loans?

I believe it is well known that the Airbus launch aid "loans" are only repayable in full if the project concerned is a financial success. How that "success" is defined I know not. I do know that if I approached bankers for a loan to fund a project on the basis that the loan would not be repaid in full unless the project was a financial success, they would (a) start laughing (b) when they had stopped laughing, explain to me that I did not understand the nature of loans - capital is provided at an agreed rate of interest to be repaid by an agreed date. Unconditionally.

If I was not prepared to accept such an arrangement, they might suggest I approach a venture capital outfit or raise the money on the stock exchange or find some other way of raising capital where the lender is prepared to sign a contract saying some or all of the funds provided may not be repaid.


User currently offlineEatmybologna From France, joined Apr 2005, 412 posts, RR: 0
Reply 19, posted (9 years 1 month 1 week 6 days 4 hours ago) and read 4613 times:

What's wrong with taking a stand on an issue that you think is not fair (including the latest concessions that the EU/EADS/Airbus/Mandelson have offered)?

What is Mandelson afraid of? Let the issue get resolved through the WTO and be done with it.



Isn't knowledge more than just the acquisition of information? Shouldn't the acquired information be correct?
User currently offlineScbriml From United Kingdom, joined Jul 2003, 12780 posts, RR: 46
Reply 20, posted (9 years 1 month 1 week 6 days 4 hours ago) and read 4601 times:
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Quoting Eatmybologna (Reply 19):
What's wrong with taking a stand on an issue that you think is not fair

Which is why the EU has counter-filed against Boeing's tax breaks and partner subsidies.

Quoting Eatmybologna (Reply 19):
Let the issue get resolved through the WTO and be done with it.

I doubt it will get that far. My belief is that Boeing has more to fear from a WTO investigation and ruling than Airbus.



Time flies like an arrow, but fruit flies like a banana!
User currently offlineRevelation From United States of America, joined Feb 2005, 12839 posts, RR: 25
Reply 21, posted (9 years 1 month 1 week 6 days 4 hours ago) and read 4599 times:

Quoting Scbriml (Reply 2):
Quoting NAV20 (Thread starter):
The move would be the first time that the Government has provided state aid in such a way. In the past, so-called "repayable launch investment" for the aerospace giant has been in the form of an interest-bearing loan that only had to be repaid if the aircraft was a sales success.

That doesn't quite seem to be how the EU says the launch loans work:
http://europa.eu.int/rapid/pressRele...&aged=0&language=EN&guiLanguage=en

Quote:
Airbus pays royalties to governments over the entire life of the aircraft programs. Interest and principal is repaid on deliveries, even before the programs break-even and irrespective of the sale price

So, which is it?

It's both! Airbus is paying over the life of the program, and is paying a given amount every time an aircraft is delivered (not every month, like our mortgages and car loans), but if the sum of those payments (principal plus interest) does not exceed the full amount of the loan when the "life" of the program ends, Airbus doesn't have to pay the difference! Thus, if the program is not a "sales success", the taxpayers eat the unpaid part of the loan! And of course it is in Airbus's interest to not repay the loan, so they negotiate to set the projected number of deliveries as high as possible, so the payment per delivery is as low as possible, and the chances of not paying the whole loan is as high as possible. My understanding is the official target for A380 is 1000 airframes, which is a very high number, IMHO. Also, if Airbus sells more than the sales target, they keep paying the taxpayers on each delivery, so if the sales go above target the taxpayers get a bonus. This is the case for the A320 program, each delivery results in a payment to the taxpayers even though the launch aid has already been paid. But this is not the case for any of the other programs (A319, A321, A318, A330-[23]00, A340-[23]00, A340-[56]00). I think A300/A10 launch aid is structured somewhat differently than the above, but I forget the details.

Quoting NAV20 (Reply 3):
Uncle Sam wouldn't mind loans at market rates. Looks like this is the 'compromise' to end the row.

Ok, I guess its my day to play "evil American". If it's "market rates", why does the UK govt have to be involved at all? Isn't the definition of "market rates" no government involvement? If there is some sort of "special" government assistance, is this available to other UK businesses, or just ones named BAe?



Inspiration, move me brightly!
User currently offlineNAV20 From Australia, joined Nov 2003, 9909 posts, RR: 36
Reply 22, posted (9 years 1 month 1 week 6 days 4 hours ago) and read 4579 times:

Quoting Revelation (Reply 21):
If there is some sort of "special" government assistance, is this available to other UK businesses

Not arguing, Revelation, we're not far apart. But yes, there is 'machinery' for the British Government to lend out money to business to create or maintain employment. As far as I know the Airbus factories in the UK are in 'Development Areas' (euphemism for areas that haven't got enough development  Smile) and therefore they (like any other businesses in those locations) could qualify for direct government loans.



"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
User currently offlineFlyAUA From Austria, joined May 2005, 4604 posts, RR: 56
Reply 23, posted (9 years 1 month 1 week 4 days 21 hours ago) and read 4481 times:

No obviously it's not the end of Launch Aid. If the US were to make life hard for Airbus, then they will suffer as well since they are still getting more help than Airbus does. See article I found last week:

http://news.bbc.co.uk/1/hi/business/4319764.stm



Not drinking, also isn't a solution!
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 24, posted (9 years 1 month 1 week 4 days 21 hours ago) and read 4460 times:

Quoting Maersk737 (Reply 6):
Of course not.....USA is the only "Superpower" we have left...They can do whatever they want, and we can't do anything about it......

I am very pro-US/Bush . But would not want my government to have that attitude !

Halibut


25 Trex8 : AWST had an article in the last year where someone calculated that if Airbus had to pay "market " interest rates on the loans they had gotten under t
26 Post contains links NAV20 : FlyAUA, point is, the British expressing their preference for straight loans is very recent. And the story came out on the date (10th. October) when
27 Toulouse : Totally off topic, but... But unfortunately my friend, in the eye's of the entire world, that's just the attitude they have...
28 Astuteman : Bring it on - I honestly can't see why A need preferential condition loans anyway. Moody's has just uprated their credit rating to A1. Also, if you l
29 Post contains images FlyAUA : All in good time... This whole thing is just a childish cry for help and a cheap attempt to stop somebody from continuing to be successful. Obviously
30 Halibut : I beg to differ , If that were true , then the US would have nuked france a long time ago & any other small defenceless country it did not see eye to
31 NAV20 : Even I find that a bit harsh, FlyAUA. Surely you can't really call Airbus asking for launch aid a 'cry for help'?
32 Shenzhen : Actually, the world looks to the USA to do what is right, and generally admire it for what it stands for. If France did anything, nobody would really
33 FlyAUA : So...? There's a difference between getting assistance to start something new, and doing your utmost to destroy something that already exists... the
34 Art : I don't think the US could do this to France with impunity, somehow. It's got its own submarine and ICBM delivery system. Touche, mon vieux!
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