Aviationhack
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Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 10:27 am

Just saw this article:

http://c.moreover.com/click/here.pl?j302162413

I know this has been brought up many times before, but I still don't understand why the worlds largest manufacturer of airliners needs any form of subsidies.
 
Flying-Tiger
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 11:48 am

Well, then ask why Boeing needs a multi-billion $ tax grant for the B787 production... answer for both manufacturers: easy and cheap money. Doesn't matter if it is a tax break or a grant as long as it is taxpayer's money you're either getting it directly or you just don't have to pay taxes you usually would be obliged to.

Re the article you've mentioned: it gives only the US-view of this affair. However, from the european point of view it is not acceptable that the US wants to cut subsidies only AFTER the B787 program for every following program by either Boeing or Airbus. And that is the casus knaxus... you can't just demand to cut subsidies after you've just agreed to spend billions on subsidies for a brand-new product and your competitor is ready to launch a competing model.

Only way out of this dillema would be either allowing the A350 the same amount of subsidies so that both players recieve similar benifits, or to have the subsidies for the 787 removed. This however is very likely not acceptable for the US... so it comes down to a ruling of the WTO which will probably be accepted by the EU but not the US. Comes down to selective trade policy for both sides...
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AirframeAS
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 2:18 pm

Quoting Aviationhack (Thread starter):
I still don't understand why the worlds largest manufacturer of airliners needs any form of subsidies.

Me either, but to Airbus, its a win-win situation regardless. A failed product (they havn't had one yet from my knowledge) won't kill Airbus anyway. They would just shrug and move on to the next product.

Quoting Flying-Tiger (Reply 1):
Only way out of this dillema would be either allowing the A350 the same amount of subsidies so that both players recieve similar benifits, or to have the subsidies for the 787 removed.

Again on the stupid lame subsidy issue... It should be removed 100% for BOTH companies. Airbus should have subsidies removed so that they can feel the heat & pressure of the competition and suck it up like a REAL man. Subsidies are EVIL!!!! If you cant afford to build it, dont do it! AND.....Flying-Tiger....congrats on starting an A/B war. I can feel one coming on....
A Safe Flight Begins With Quality Maintenance On The Ground.
 
optionscle
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 3:02 pm

Quoting Flying-Tiger (Reply 1):
Well, then ask why Boeing needs a multi-billion $ tax grant for the B787 production

This has been discussed before. Boeing is not getting capital to aid in the development of the 787 like Airbus is receiving for the A350. Boeing is simply getting promised tax cuts that will only help the manufacturer if the 787 sells and is successful. Anyone with even the most basic economics background, such as myself, can grasp this point. Airbus definitely comes out on top in terms of benefit in this case. That's not to say that both sides aren't in the wrong, it just shows that Airbus is getting much more of an advantage than Boeing.

-Andrew
 
Flying-Tiger
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 3:21 pm

That's bullshit, and you know it. Comes when you read too much BS posted on a.net. Airbus has to repay their loan (and that's what the US press seems to like to avoid - it is a repayable loan with good terms, but still a loan, not a grant), while Boeing does not need to pay taxes on income from the 787, effectively recieving a tax grant. But well, talk about one biased point of view over the pond.

Okay, then remove all subsidies now. No money for the 787, no money for the A350, no subsidies for R&D and no subsidies for further projects. Done deal, have nothing against it, absolutely fine. Best solution you could propose - thus both boeing and Airbus have to go to the capital market to get money for the 787 respectively 350.
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optionscle
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 3:45 pm

First of all, I think that before you post again you need to step back, take a deep breath, and remember the rules of posting here on Airliners.net as well as how to conduct an effective discussion. Starting off a post with inflammatory language such as that is, aside from being grounds for having your membership here canceled, rude to the other members and an invitation for people to immediately disregard your argument which I see as very much valid.

You are right about Airbus's loans being repaid, however, the fact remains that a bird in the hand is worth two in the bush. I agree that neither company should have their R&D costs hand to them. Boeing, though, is at a disadvantage no matter how you look at it. Both companies and sets of governments are in the wrong, as I said before, but in this case, Boeing is certainly the lesser of two evils.

-Andrew
 
Leskova
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 3:47 pm

Quoting Aviationhack (Thread starter):
but I still don't understand why the worlds largest manufacturer of airliners needs any form of subsidies.

You know... writing something like that after starting a thread titled "Airbus doesn't need Subsidies, but likes them" seems kinda strange...

Quoting AirframeAS (Reply 2):
It should be removed 100% for BOTH companies

Absolutely, 100% agree with you.

Quoting AirframeAS (Reply 2):
Airbus should have subsidies removed so that they can feel the heat & pressure of the competition and suck it up like a REAL man.

 rotfl   rotfl   rotfl   rotfl   rotfl 

You really should try to find some new stereotypes - that one's just too damn ridiculously funny...

Quoting OptionsCLE (Reply 3):
Boeing is simply getting promised tax cuts that will only help the manufacturer if the 787 sells and is successful

Yes... right... sure... whatever you want to believe.

Have you had a look at Boeing's orderbook for the B787 lately? How many doubts do you still have about it being a success? Anything other than a major screwup by Boeing, and they have a big winner on their hands.

Anyone who deals with numbers all day will be able to tell you that if you've got the choice between getting a loan that you have to pay back and getting a credit that you won't have to pay either way (either the product doesn't sell, so you won't have to pay taxes on the income - or the product does sell, and you won't have to pay taxes on the income), that you're better off taking the tax credit that you, again, will not have to repay regardless what happens.

Quoting AirframeAS (Reply 2):
AND.....Flying-Tiger....congrats on starting an A/B war. I can feel one coming on....

Oh please... as opposed to the uncontested Airbus bashing that would have developed otherwise?  Yeah sure

And as if this thread even had a chance from the beginning - with a title like this, and an opening post as the one in here...


Regards,
Frank
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keesje
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 4:20 pm

Some time ago I started a topic The $6 Billion 7E7 Subsidies, Justified?

http://www.airliners.net/discussions...general_aviation/read.main/1928802

I think much was covered here. People still believing Boeing is a blue eyed company playing a fair game is IMO living in a dream world.
"Never mistake motion for action." Ernest Hemingway
 
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sebolino
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 4:38 pm

Quoting AirframeAS (Reply 2):
A failed product (they havn't had one yet from my knowledge) won't kill Airbus anyway. They would just shrug and move on to the next product.

Sorry to kill your dreams, but only one third of the developpement costs may be covered by state loans, not all of them.
 
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sebolino
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 4:51 pm

Quoting OptionsCLE (Reply 3):
This has been discussed before. Boeing is not getting capital to aid in the development of the 787 like Airbus is receiving for the A350. Boeing is simply getting promised tax cuts that will only help the manufacturer if the 787 sells and is successful

You won't change the truth just with words ! No matter how hard you try.
Tax breaks are an aid even if the plane is not successful, except if in the US you don't pay workers when the plane is not successful.
And again, the subsidies given to Boeing don't follow the 1992 agreement, contrary to Airbus' subsidies.
 
keesje
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 5:47 pm

Boeing 787 Subsidies :

Washington State $3.2 billion
Kansas ............... $0.5 billion
Oklahoma ........... $0.35 billion
Japan .................$1.6 billion
Italy ...................$0.59 billion

Total ..................$6+ Billion

The launch aid Airbus receives is paid back and is compatible with the 1992 Agreement, while Boeings support is not.

Boeing has launched an unprecedented (succesfull) media / political lobby twisting everything around & telling half the story..

IMO they are basicly protecting the Boeing 787 aid are receiving by attacking the EU & distracting attention.

Please let the WTO judge!

However I can see Bush ignoring the WTO if he doesn't like the outcome..
"Never mistake motion for action." Ernest Hemingway
 
leelaw
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 6:51 pm

Quoting Keesje (Reply 10):
Please let the WTO judge!

I agree, let face-saving, barnyard justice prevail in the end....as it always does!
Lex Ancilla Justitiae
 
Flying-Tiger
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 7:54 pm

Wrong "Facts" posted by other a.net members don´t become "facts" simply because they are repeated over and over, as it seems to be the case here. Sorry to blow your myth that Boeing is the shinging angel...

Effective discussion... sure - it only reads "check if your post has already been discussed" as one of the rules. Makes it pretty straight forward clear, that already the original topic was superfluent. Sorry, but this forum is heading straight down the drain...
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galapagapop
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 8:17 pm

Quoting Flying-Tiger (Reply 4):
That's bullshit, and you know it. Comes when you read too much BS posted on a.net. Airbus has to repay their loan (and that's what the US press seems to like to avoid - it is a repayable loan with good terms, but still a loan, not a grant), while Boeing does not need to pay taxes on income from the 787, effectively recieving a tax grant. But well, talk about one biased point of view over the pond.

Okay, then remove all subsidies now. No money for the 787, no money for the A350, no subsidies for R&D and no subsidies for further projects. Done deal, have nothing against it, absolutely fine. Best solution you could propose - thus both boeing and Airbus have to go to the capital market to get money for the 787 respectively 350.

He is right there are loans on most models, thats paid for after every delivery, but some of these are non-refundable for if the the program doesn't sell the neccessary number of planes to make back the money. For example the number for the A300 program was around 700, of coarse these loans could work the other way like with the A320 program which has long since repaid its loan and is now generating money for the lender. So it really can balance out. The kind of subsidies that are not need are launch production ones, make em' pay on their own, and as for Boeing doing this after getting a lot for its 787, well they hadn't made a plane in 10 years so give em' that one, seeing as Airbus was developing the A380 during that time. Of coarse we also need to remove politically decided orders...
 
mrocktor
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Tue Apr 05, 2005 9:07 pm

Quoting Galapagapop (Reply 13):
as for Boeing doing this after getting a lot for its 787, well they hadn't made a plane in 10 years so give em' that one

So the logic is: "Boeing hasn't spent serious money on R&D for 10 years, so let the government pay for their current program". How does that make any sense?

Another question: the 787 has an all composite fuselage and wings. Does anyone here intend to convince me that Boeing Commercial Aircraft has paid for the R&D that went into making this practical? Oh, right, and the military contracts Boeing receives are not in any way subsidies to their commercial business.

Airbus receiving sugar coated loans is unnecessary, but you have to grant them one thing: they stuck to the deal. Boeing decided to break the deal (the 787 subsidies account for 3/4 of the estimate costs, a far cry from the allowable 1/3) and in true neo-con fashion thew up this marvelous smokescreen.

Unfortunately it is a fact that if you repeat something enough, the average american will beleive it - especially if what you are saying is that the USA is the good guy in a bad world.

mrocktor
 
hoya
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 12:01 am

Doesn't Airbus get tax breaks as well? Didn't EADS get a hefty tax break from their Eurocopter plant in Mississippi (or wherever it is)? Tax breaks are radically different than launch aid loans. That $3.2 billion for Boeing (actually, it's for all aerospace companies in WA)will only be realized over a period of 20 years! And lets not forget that Airbus is considering building a plant in Washington state just to take advantage of that tax break as well. Simple fact is, if Airbus takes launch aid loans and the plane fails, or doesn't meet the sales targets, the loans don't have to be repaid. This eliminates a huge amount of risk for Airbus. Anyone would love to have loans like that. If Boeing takes loans from commercial banks, it has to repay them no matter if the plane sells or not. So Boeing assumes more risk. Oh, and lets not use that argument that Boeing gets a ton of money from the Defense Department. EADS and BAE defense revenues, owners of Airbus, are larger than Boeing's.
Hoya Saxa!!
 
AirframeAS
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 12:09 am

Quoting Leskova (Reply 6):
Quoting AirframeAS (Reply 2):
Airbus should have subsidies removed so that they can feel the heat & pressure of the competition and suck it up like a REAL man.



You really should try to find some new stereotypes - that one's just too damn ridiculously funny...

Thank you...glad you approve! LOL!

Quoting Sebolino (Reply 8):
Sorry to kill your dreams, but only one third of the developpement costs may be covered by state loans, not all of them.

Im talking about products that WOULD NOT BE covered by subsidies. It isnt my 'dream' as you put it, to see Airbus fail. I dont want to see thousands and thousands of people put out of work. Airbus needs to get a grip onto reality and become a real competitor in the industry. Having subsidies is considered as cheating, dont you agree?

Quoting Keesje (Reply 10):
Boeing 787 Subsidies :

Washington State $3.2 billion
Kansas ............... $0.5 billion
Oklahoma ........... $0.35 billion
Japan .................$1.6 billion
Italy ...................$0.59 billion

Total ..................$6+ Billion

Sorry pal, thats indirect subsidies. Boeing will NOT see any of these monies at all. No one is loaning Boeing anything. The one from Washington State is a tax break. There are more than one type of subsidy and Boeing and Airbus subsides are NOT the same. Airbus gets DIRECT subsidies that they do PHYSICALLY see.

Ok enough ranting. Lets end this stupid subsidy issue. Its getting old and boring. Im pretty sure others would agree. Lets move on to more important things.....
A Safe Flight Begins With Quality Maintenance On The Ground.
 
mrocktor
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 12:37 am

Here we go again...

I get 3 bucks from the government I don't have to repay if I don't make a profit, Joe gets 4 bucks discounted from his taxes (I still have to pay my taxes...), some japanese guy gives Joe 2 bucks (which he will never repay)and an italian dude chips in another 75 cents (no repayment on that either).

Now lets see, how is that even remotely fair? You see, when both products hit the market Joe and I will have spent roughly the same amount of other people's money (3 vs 2.75), except I have to repay my loan. Oh, and Joe can further discount his product since he doesn't pay his taxes.

The numbers are in proportion to the 787 and A350 subsidies.

Get it through your heads: the current scenario has Boeing receiving a lot more subsidies then Airbus. Boeing is in violation of the standing agreement between the two and Boeings subsidies are actionable by WTO standards - that means they are against trate treaties signed by the United States of America.

As an american, I find this state of affairs despicable. Had Airbus' subsidies been challenged before the 787 or a "equivalent level of subsidies", within the 1992 agreement and WTO compliant devised I would be all for it (as a stopgap before the complete elimination of subsidies is achieved of course).

As it is, Boeing and the USA come across as pretty underhanded, and make it worse by intentionally misrepresenting the situation in the media.

Embarassing.

mrocktor
 
leelaw
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 12:56 am

Neither of these organizations come to the table with "clean hands."

Isn't Airbus exempted from certain VAT charges that would normally be levied on comparable industrial goods by various taxing authorities, which provides it a substantial basis for price flexibility? How does this differ from tax rebate/relief packages Boeing receives from various state and local taxing authorities?
Lex Ancilla Justitiae
 
AirframeAS
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 1:11 am

Quoting Mrocktor (Reply 17):
Get it through your heads: the current scenario has Boeing receiving a lot more subsidies then Airbus. Boeing is in violation of the standing agreement between the two and Boeings subsidies are actionable by WTO standards - that means they are against trate treaties signed by the United States of America.

The last time I checked, there is no agreement anymore. The U.S. ended the agreement last year, so there is no agreement.
A Safe Flight Begins With Quality Maintenance On The Ground.
 
yul332LX
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 1:21 am

Quoting AirframeAS (Reply 16):
Sorry pal, thats indirect subsidies. Boeing will NOT see any of these monies at all. No one is loaning Boeing anything. The one from Washington State is a tax break. There are more than one type of subsidy and Boeing and Airbus subsides are NOT the same. Airbus gets DIRECT subsidies that they do PHYSICALLY see.

This is a very misinformed statement. Boeing not only does get direct subsidies, mostly from Japan (via Mitsubishi, Fuji and Kawasaki), but also indirect subsidies from US govts. and production subsidies.

Some of the direct subsidies are in violation of WTO’s TRIM Agreement (more specifically, the article 2.1) but more importantly, this financial support is illegal because it is related to the production of the aircraft itself as well as the construction of facilities needed for the development of the 787 (which can only be subsidized in the order of 2% or 3% of the total cost as per WTO rules, formerly known as the GATT).

In this case, 38% of the cost is subsidized so there’s a clear violation there.


In fact, quite a few analysts have argued that Boeing pulled out of the 1992 bilateral agreement specifically because the 787 is a clear violation of this very agreement.

For more on this topic:

http://www.ita.doc.gov/td/aerospace/agreements/air-79.htm
http://www.ita.doc.gov/td/aerospace/aerospace_subsidies.pdf
http://www.geog.buffalo.edu/custac/occppr28.pdf

Airbus is subsidized? Sure… but Boeing plays the game just as well, if not better.  Wink

[Edited 2005-04-05 18:26:31]
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PHXFLY
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 2:18 am

Quoting OptionsCLE (Reply 3):
This has been discussed before. Boeing is not getting capital to aid in the development of the 787 like Airbus is receiving for the A350. Boeing is simply getting promised tax cuts that will only help the manufacturer if the 787 sells and is successful. Anyone with even the most basic economics background, such as myself, can grasp this point. Airbus definitely comes out on top in terms of benefit in this case. That's not to say that both sides aren't in the wrong, it just shows that Airbus is getting much more of an advantage than Boeing.

Also, just to add that these tax breaks are available to any corporation. Isn't the state of Washington currently negotiating tax breaks in an attempt to lure EADS to come to the state?
 
mrocktor
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 2:19 am

Quoting AirframeAS (Reply 19):
The last time I checked, there is no agreement anymore. The U.S. ended the agreement last year, so there is no agreement.

Yes, they cancelled the agreement after lining up all the 787 subsidies, while saying they were pulling out because Airbus was receiving too much aid whithin the agreement terms!!??

Or, to put it clearly: Airbus is getting too much subsidies within this agreement because it is outdated, so we are pulling out. Meanwhile we ourselves have set up to receive twice as much subsidies. But they are the "bad guys"... yeah.

Finally, the USA has not ended their commitment to the WTO and Boeing's subsidies violate that one as well.

But you go on believing the United States are paragons of fairness, thats what is taught from kindergarten to CNN after all.

mrocktor
 
FriendlySkies
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 4:08 am

Lets just agree that BOTH companies are in the wrong. Boeing should not have outsourced production to Japan, but I see it as almost a form of competition...in order to remain competitive with Airbus, Boeing needed to match the finanical help their competitor was receiving. Unfortunately, the government can't outlaw Boeing from doing that because it would disrupt the free trade agreements with Japan and really piss off the Japanese. Boeing was wrong, but I fail to see how any legislation can stop what they did. Airbus could do the same thing mind you, so the argument that they need direct subsidized loans from their government to remain competitive doesn't hold.

I will say this: the state tax incentives will NEVER go away. States give these tax breaks to all sorts of companies, and especially to those companies who bring a lot of revenue to the state. The states are businesses too, and are using the tools at their disposal to attract revenue for the state, thereby improving the quality of living for their citizens. It's a lot more complicated than WA just giving Boeing a tax break for the hell of it. WA wants Boeing making airplanes in THEIR state, because those airplanes are generating revenue and employing THEIR citizens.
 
Leskova
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 4:21 am

Quoting FriendlySkies (Reply 23):
WA wants Boeing making airplanes in THEIR state, because those airplanes are generating revenue and employing THEIR citizens.

Unfortunately, that's precisely the explanation used for every subsidy given by any government entity around the world - either they'll all have to adhere to the same legal limits, or none of them have to.

And with that, we've come to the dilemma at the very heart of the problem.

Why would a subsidy given by France be something bad, while a subsidy by Washington would be good? Would France's subsidy be good if it were not given by France, but, for example, by the city of Toulouse? Would money from Germany be unproblematic in your view, if it were not Germany's government providing it, but the states that make up Germany?

In my eyes, there's absolutely no difference - either it's money from the government, or it's not.

Either you allow it, or you don't.

Personally, I'm for the "don't" solution.

Regards,
Frank
Smile - it confuses people!
 
yul332LX
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 4:32 am

Quoting FriendlySkies (Reply 23):
Boeing should not have outsourced production to Japan, but I see it as almost a form of competition...in order to remain competitive with Airbus, Boeing needed to match the finanical help their competitor was receiving.

Be careful there... Boeing and DC/MD have (had) been outsourcing to Japan, Italy and Canada for almost 40 years, so Airbus has actually nothing to do with it. Heck, Airbus was not even around then  

Boeing and Douglas were the first to outsource part of their production, in which was then considered a new way to secure order from flag carriers like JL, AC and AZ.

Quoting Leskova (Reply 24):
Personally, I'm for the "don't" solution.

Agreed. A and B might disagree though.

[Edited 2005-04-05 21:34:17]
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DAYflyer
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 4:40 am

I am afraid with this latest release things are escelating very rapidly:

UPDATE:EU, US Deadlocked On Aircraft Aid; US Warns On R&D

Tuesday April 5, 1:57 PM EDT
(Updates with response from E.U. officials and spokeswoman Claude Veron- Reville.)

BRUSSELS -(Dow Jones)- A row between the U.S. and the European Union over how to dismantle billions of dollars of aid for their rival aircraft makers escalated Tuesday, with both sides waiting for the other to make a conciliatory move to avoid taking the case to the World Trade Organization.

The E.U. said Trade Commissioner Peter Mandelson has had no response to proposals published last week in a letter in the Washington Post on how to restart talks that broke down last month.

"We have had no reaction to the proposals which had been made by Mr. Mandelson," said E.U. spokeswoman Francoise Le Bail.

Senior aides to Mandelson had also relayed this information to the White House and through "appropriate channels," E.U. officials said.



U.S. Deputy Secretary of State Robert Zoellick, who heads U.S. negotiations on the issue, said Mandelson had failed to approach him directly.

"I read his position in the Washington Post. That's not exactly the way I did business with (former E.U. trade) Commissioner (Pascal) Lamy," he told reporters Tuesday during an official visit to Brussels.

E.U. officials said Mandelson wouldn't respond to what they said was a personal jibe.

"For Peter Mandelson this is a policy issue not a personal issue. The difference is between the E.U., which believes that this case should not and need not go to the WTO and some on the U.S. side who have seemed determined to get it into the WTO from the start," said Mandelson's spokeswoman Claude Veron- Reville.

The deadlock is diminishing any prospect of an initial deal by an agreed April 11 deadline. If the row continues unresolved, the case could go to the WTO for judgment. This could hurt both sides significantly if the WTO rules all subsidies illegal.

Zoellick reiterated he is ready to ask the WTO to take over solving the case if necessary.

He questioned the feasibility of some of Mandelson's proposals of how to cut aid, warning these would "ensnare a lot of European research and development." Under Mandelson's suggestions for outlawing indirect aid, research funding could become illegal for projects such as Europe's military jet fighter Eurofighter, military transport aircraft currently being developed and space launcher vehicles, Zoellick said.

"Some of these proposals would have created in my view nightmares for the E.U.'s own member states," he said.

Taking a softer tone, Zoellick said he also would be willing to continue talks beyond April 11, but said a new U.S. trade representative due to be appointed in April would also have some say in the matter.

The row is souring a long-standing trade relationship between the E.U. and U.S., which in past years weathered even tough transatlantic standoffs over the war in Iraq and steel subsidies. That relationship was built largely on a personal affinity between Zoellick, who was then the U.S. trade representative, and his E.U. counterpart at the time, Pascal Lamy. There is little evidence of such a relationship between Washington and Mandelson.

In his letter to the Washington Post, Mandelson warned going to the WTO "would be a mistake."

Instead, "both sides need to take a balanced, step-by-step approach and tailor what they request from the other to what they themselves are willing to contribute," Mandelson wrote. Europe would "significantly reduce" its launch aid for Airbus (ABI.YY). In return there should be "a commensurate offer by the United States to lower its subsidies for Boeing (Co.) (BA)."

Europe also is demanding some assurance from Washington that aid to manufacturers of Boeing components in Japan be cut eventually.

Washington says it is frustrated with the E.U. expanding the scope of talks. A framework for initial talks set out that only aid within the U.S. and E.U. would be discussed, and that aid given in third countries would be dealt with in follow-up talks.

"You need to manage when you disagree," Zoellick said. "The key is rather straightforward communication of what one can and can not do, how to try to solve a problem together."

-By Juliane von Reppert-Bismarck, Dow Jones Newswires; 32-2-741-1487; juliane.vonreppert@dowjones.com


Dow Jones Newswires
04-05-05 1357ET


© 2005 Dow Jones & Company, Inc. All Rights Reserved.

Let the flames begin!
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DAYflyer
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 4:48 am

Quoting Flying-Tiger (Reply 1):
Well, then ask why Boeing needs a multi-billion $ tax grant for the B787 production.

For the 100,000 time, it is NOT a grant. It is a tax break, or reduction in taxation. This is not the same thing as Airnus being cut a check by a government to provide them with $ from the taxes collected. This is a tax break, a reduction in the amount of taxes paid into the goverment by the company.

Also the tax breaks were granted by Japan, not the US. The other tax breaks where given by the state of Washington, not the US federal government.

Quoting Flying-Tiger (Reply 4):
That's bullshit, and you know it. Comes when you read too much BS posted on a.net. Airbus has to repay their loan (and that's what the US press seems to like to avoid - it is a repayable loan with good terms, but still a loan, not a grant),

No sir, THATS BS, and YOU know it. Airbus only has to repay if its product is profitable.
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hmmmm...
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 5:05 am

Let's settle this dispute once and for all. The subsidies should go to the company that makes the better planes. So all we have to decide on then is which company that is. Which should be no problem now. Boeing fans will politely agree that Airbus deserves the subsidies, not Boeing. Airbus fans will politely insist that Boeing should receive the subsidies. This will thereby eliminate those two eternal debates on airlines.net.
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yul332LX
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 5:06 am

Quoting DAYflyer (Reply 27):
For the 100,000 time, it is NOT a grant. It is a tax break, or reduction in taxation. This is not the same thing as Airnus being cut a check by a government to provide them with $ from the taxes collected. This is a tax break, a reduction in the amount of taxes paid into the goverment by the company.

Part of it is actually a direct subsidy to production as explained in reply number 20.

The tax breaks are just one of the few incentives Boeing is getting from various govt.
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mrocktor
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 5:11 am

Quoting DAYflyer (Reply 27):
No sir, THATS BS, and YOU know it. Airbus only has to repay if its product is profitable.

The only instance where Airbus would unfairly benefit form the loans is if they don't turn a profit. Except they don't do business to lose money do they? And they have larger profit margins on their commercial aircraft than Boeing. Hmm...

While he didn't state the complete facts, your assertive that "its not money up front so its not a subsidy" is total and complete... nah, you guys have thrown that word around enough.

Between a 10 grand loan I don't have to repay if I go unemployed and a 10 grand rebate on next year's taxes I'll take the tax break every time and so would you.

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scotron11
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 6:22 am

Quoting Leskova (Reply 24):

In my eyes, there's absolutely no difference - either it's money from the government, or it's not.

Either you allow it, or you don't.

Personally, I'm for the "don't" solution.

As we are talking subsidies here, look at the situation with AZ. They were allowed a 400M euro government loan to repaid within one year. The clock started ticking in January.

Their restructuring plan, now before the EU Commission, calls for a recapitalization of 1.2Billion euros. Part of this plan is to split into two separate entities, AZFly and AZService. AZService investor, of 49%, would be Fintecna (a wholly owned government investment company) for 220M euros.

Now, the way I look at it, is not the 220M euros government money, and hence a subsidy? Not only that, the Italian government has already earmarked 750M euros for the so called recapitalization.

And, if reports are to be believed, EU commissioner Barot likes what he sees!

I don't agree with the EU allowing governments to prop up their carriers, as I don't agree Airbus should be receiving launch aid. Maybe 30 years ago, but certainly not now.
 
AirframeAS
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 7:29 am

Quoting Scotron11 (Reply 31):
Either you allow it, or you don't.

Personally, I'm for the "don't" solution.

Im in agreement with Scotron. This subsidiy issue has gone way too far. There is no fair game when one recieves subsidies when the other is not allowed to. Where's the competition in that? There isnt any!

Im glad that the U.S. has voided the agreement last year. Its about time!

End the subsidy issue once for all, its getting old....

Quoting DAYflyer (Reply 27):
For the 100,000 time, it is NOT a grant. It is a tax break, or reduction in taxation. This is not the same thing as Airbus being cut a check by a government to provide them with $ from the taxes collected. This is a tax break, a reduction in the amount of taxes paid into the goverment by the company.

The best argument Ive seen on this forum and DAYflyer is right.

Quoting YUL332LX (Reply 29):
Part of it is actually a direct subsidy to production as explained in reply number 20.

WRONGO!!!! Its is NOT a direct subsidy. It is an indirect subsidy. WA State is not cutting them a check for anything; they are not cutting a check for ANYONE for ANY reason. The big difference between what Airbus is getting and what Boeing is getting: Airbus is getting a check to cash in the bank means ACTUAL funds. Boeing is only having to pay cheaper taxes. Big difference there. Geezus!!!

End the subsidy issue once for all, its getting old....
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yul332LX
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 7:42 am

Quoting AirframeAS (Reply 32):
WRONGO!!!! Its is NOT a direct subsidy. It is an indirect subsidy. WA State is not cutting them a check for anything; they are not cutting a check for ANYONE for ANY reason. The big difference between what Airbus is getting and what Boeing is getting: Airbus is getting a check to cash in the bank means ACTUAL funds. Boeing is only having to pay cheaper taxes. Big difference there. Geezus!!!

End the subsidy issue once for all, its getting old....

Boeing is getting direct subsidies. I already provided the links and sources above. In fact, there's another thread (citing The Economist) confirming what's been wrote about boeing.
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AirframeAS
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 8:11 am

Quoting YUL332LX (Reply 33):
Boeing is getting direct subsidies.

No they're not, PERIOD. Nobody is cutting Boeing any checks for them to smile all the way to the bank. They are not getting any DIRECT subsidies. Indirect on the other hand is what Boeing is getting. Geezus!
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yul332LX
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 8:32 am

Quoting AirframeAS (Reply 34):
No they're not, PERIOD. Nobody is cutting Boeing any checks for them to smile all the way to the bank.

Yes they do get direct subsidies. Links and sources were given above.

Quoting AirframeAS (Reply 34):
Geezus!

Stop calling me Jesus. It is an insult to my superior-atheis-minded-person.  Wink
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norcal
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 10:07 pm

I have recently read articles that Airbus might be building a plant in North America (maybe even Seattle). I don't know much about it, but wouldn't the competing states most likely offer Airbus tax incentives similar to what Washington offers Boeing in order to get the plant in their state? If that is the case then Airbus technically would be getting some of Boeing's indirect subsidies in addition to what they already get from the EU, (I'm all for Airbus building a plant in America, generates jobs which is good for the economy) but would this affect the subsidy debate?
 
DAYflyer
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Wed Apr 06, 2005 10:23 pm

Quoting NorCal (Reply 36):
have recently read articles that Airbus might be building a plant in North America (maybe even Seattle). I don't know much about it, but wouldn't the competing states most likely offer Airbus tax incentives similar to what Washington offers Boeing in order to get the plant in their state? If that is the case then Airbus technically would be getting some of Boeing's indirect subsidies in addition to what they already get from the EU

That's correct, they would then be getting direct Cash handouts from Paris and a nice little tax break from WA to boot. Boeing would absolutely love to get a deal like that. If they do this for Airbus, they may as well close down BA because there is no way they can compete like that.
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Fiatstilojtd
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RE: Airbus Doesn't Need Subsidies, But Likes Them

Thu Apr 07, 2005 3:23 am

Quoting AirframeAS (Reply 32):
Quoting Scotron11 (Reply 31):
Either you allow it, or you don't.

Personally, I'm for the "don't" solution.



Im in agreement with Scotron

originally posted by Leskova  duck   Yeah sure