kellmark
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EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 10:47 pm

An interesting comment by the EU Trade Commissioner.

It also says that negotiations may be reopened.

"PARIS, Sept 24 (Reuters) - Europe must be prepared to curb subsidies for Airbus (EAD.PA: Quote, Profile, Research) if a trade row with U.S. rival Boeing (BA.N: Quote, Profile, Research) is settled, European Union Trade Commissioner Peter Mandelson said in a newspaper interview published on Saturday."

Seems that there is recognition that the Airbus subsidy position is no longer tenable and that the WTO is going to rule against them. I wonder what effect this will have on the A350?

Here is the link.

http://yahoo.reuters.com/financeQuot...05-09-24_09-18-36_l24580214_newsml
 
Scorpio
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:11 pm

From the same article: "The World Trade Organisation (WTO) is examining the dispute and the International Herald Tribune quoted Mandelson as saying its verdict could disappoint both parties."

BOTH parties. Don't believe for a single second that this is even remotely as clear-cut as the US (and EU) will have you believe, even though there will be some in here trying to tell us how Airbus and Europe are the only ones at fault here.
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:16 pm

Quoting Kellmark (Thread starter):
European Union Trade Commissioner Peter Mandelson



Quoting Kellmark (Thread starter):
From the same article: "The World Trade Organisation (WTO) is examining the dispute and the International Herald Tribune quoted Mandelson as saying its verdict could disappoint both parties."



Quoting Scorpio (Reply 1):
BOTH parties. Don't believe for a single second that this is even remotely as clear-cut as the US (and EU) will have you believe

No, that's just what the European side of the argument would have you believe. Look, when someone starts indicating their flexability if they can just keep a little, it means that they probably beleive that they can loose it all...
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:21 pm

Peter Mandelson !!!! , if he told me tomorrow was Monday I'd check the newspaper for confirmation Sad
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Scorpio
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:25 pm

Quoting AirFrnt (Reply 2):
No, that's just what the European side of the argument would have you believe.

See?
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:27 pm

Quoting Scorpio (Reply 1):
From the same article: "The World Trade Organisation (WTO) is examining the dispute and the International Herald Tribune quoted Mandelson as saying its verdict could disappoint both parties."

BOTH parties. Don't believe for a single second that this is even remotely as clear-cut as the US (and EU) will have you believe, even though there will be some in here trying to tell us how Airbus and Europe are the only ones at fault here.

I see no such suggestion in the linked article.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:33 pm

Quoting GARPD (Reply 5):
I see no such suggestion in the linked article.

No such suggestion of what? The first paragraph (which is a direct quote)? Or the second one, which was about what especially the US has been trying to claim for years, and about what some have been saying in here and will continue to say?

[Edited 2005-09-25 16:33:50]
 
georgiaame
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:34 pm

Right.

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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Sun Sep 25, 2005 11:40 pm

Mandelson's worry throughout has been that the Airbus dispute will so inflame American attitudes that it will scupper negotiations on the Doha trade round, which involves much bigger issues that the aircraft industry.

It probably will, too.

"PETER MANDELSON considered calling in the Prime Minister to intervene in negotiations over subsidies to Airbus and Boeing, so concerned was he by the US Government’s tactics in the dispute.

"The European Trade Commissioner told The Times that he was so alarmed by the state of the dispute that he had considered asking heads of state, including Tony Blair, to appeal to President Bush.

"Mr Mandelson accused Robert Zoellick, his US counterpart, of being bent on “war” over the dispute between aircraft manufacturers Airbus and Boeing. He said that Mr Zoellick’s attitude would lead to the biggest transatlantic trade battle, would damage US-EU relations and would derail the Doha trade round."


http://business.timesonline.co.uk/article/0,,13130-1565374,00.html
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garpd
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 12:25 am

Quoting Scorpio (Reply 6):

No such suggestion of what? The first paragraph (which is a direct quote)? Or the second one, which was about what especially the US has been trying to claim for years, and about what some have been saying in here and will continue to say?

All it says is what Boeings claim is and What Airbus' claim is.
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ikramerica
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 12:48 am

The WTO could easily claim that tax breaks are illegal as well, which would basically thwart all new business ventures in free countries but do nothing to communist nations like China.

Once it becomes clear to Airbus that the extortion part of their business model won't fly anymore, expect to see a new bilateral with the US revising what is allowed.

Maybe launch aid that MUST be repaid no matter what at a fair rate of return, not just if the program makes money. Such a change wouldn't be that dramatic for Airbus, honestly, as all projects going forward should make plenty of money (A350, A320NG) as long as Airbus doesn't make a huge blunder along the way.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 1:24 am

Quoting Ikramerica (Reply 10):
The WTO could easily claim that tax breaks are illegal as well,

There have been statements from the WTO indicating that tax breaks are being seen as identical to subsidies... draw your own conclusions from that...

Quoting Ikramerica (Reply 10):
Once it becomes clear to Airbus that the extortion part of their business model won't fly anymore

Oh please - that comment is so ridiculous, I'm not going to do anything but point out that, in fact, it is ridiculous.

Quoting Scorpio (Reply 4):
See?

At least now I know that I wasn't the only one not surprised...  Wink

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iwok
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 2:38 pm

Quoting NAV20 (Reply 8):
"Mr Mandelson accused Robert Zoellick, his US counterpart, of being bent on “war” over the dispute between aircraft manufacturers Airbus and Boeing. He said that Mr Zoellick’s attitude would lead to the biggest transatlantic trade battle, would damage US-EU relations and would derail the Doha trade round."

Translation... "If the US continues to demand an end to launch-aid, then the EU will take a negative stance in Doha talks on any issues which are important to the US"

Mandelson's statement is bascially politely phrased political blackmail. Happens all the time in world affairs.  Smile

-iwok
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 2:46 pm

Don't quarrel violently with your 'translation', Iwok  Smile

But, reading the other things that Mandelson has said, I would translate it as:-

"If the EU goes ahead and offers launch aid for the A350, there is a risk that the US Government will take the opportunity to retaliate on a broad front against EU trade, any way it can. And the EU needs the US market much more than the USA needs the European one."
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 7:11 pm

Quoting Leskova (Reply 11):
There have been statements from the WTO indicating that tax breaks are being seen as identical to subsidies... draw your own conclusions from that...

Yes and that is how "both" sides would be in a position to lose out. After all Airbus is applying for the same tax breaks for the Production plant as part of their A330 based Tanker bid, right? So if the WTO rules against those Tax Breaks both sides will lose out. Interstingly, despite a rapid headcount increase at Airbus/EADS, they have just announced a cost cutting / productivity plan which is expected to lead to savings of up to Euro 1.5 billion over 5 years.

Quoting NAV20 (Reply 8):
"Mr Mandelson accused Robert Zoellick, his US counterpart, of being bent on “war” over the dispute between aircraft manufacturers Airbus and Boeing. He said that Mr Zoellick’s attitude would lead to the biggest transatlantic trade battle, would damage US-EU relations and would derail the Doha trade round."

C'mon NAV20, you can provide a quote and you can provide a link but given how you watch this you should know better than to post this crap. Why? It's just not relevent given Mr R Zoellick is no longer the U.S. Trade Commissioner that Mr Mandelson negotiates with.

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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 7:32 pm

Good. Keep the fire under the pan. Welcome to reality Airbus.
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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 7:34 pm

Don't read too much into it, Panam - it's only one para. out of three I quoted (from back last April, I think), and it's Mandelson's view, not mine.

My purpose was to show that Mandelson was, and no doubt remains, s**t-scared of the (relatively minor) Airbus issue scaring up a major trade dispute that the EU can ill afford. The United States Government is facing a runaway trade deficit. It would like nothing better than an excuse to slap import tariffs on EU products. Not so much aircraft, which are not a big issue - more cars and other manufactured consumer goods.

I recall Mandelson from my days living in the UK. He's an 'odd-ball' by any standards, but his brainpower/political instincts have never been in doubt. He'll know that the EU can't afford to 'go to bat' for Airbus in this dispute. The subsidies - direct low-interest, even non-returnable, loans direct from central governments, with no strings like 'regional policy' attached, and no tests of project viability - are too nakedly obvious for the WTO to find in the EU's favour.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 7:53 pm

Quoting NAV20 (Reply 16):
Don't read too much into it, Panam - it's only one para. out of three I quoted (from back last April, I think), and it's Mandelson's view, not mine.

I understand it is Mr Mandelson's view and not yours. My point is you should not take statements from April when he was negotiating with Mr Zoellick as it's pointless given he has to negotiate with a new U.S. Commissioner and they seem to be getting along a lot better given they're both relatively new to their respective roles. Mr Zoellick didn't exactly want to give up his role and that was reflected in his approach to the final months of his term.

Quoting NAV20 (Reply 16):
He's an 'odd-ball' by any standards, but his brainpower/political instincts have never been in doubt.

I don't doubt his brainpower but I do doubt his political instincts. Twice he had to resign from the Ministry due to "sleaze" as the English Media so eloquently put it. For that to happen his instinct's can't be too good.

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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 8:15 pm

I don't think it was his political instincts that got him into trouble, Panam!  Smile

This (later) quote probably sums up what Mandelson is thinking better. He's dead against launch aid for the A350:-

"Europe must be prepared to reconsider any launch aid for the A350, the new Airbus plane, if talks with the US on aircraft subsidies restart, Peter Mandelson has warned.

"The European Union's trade commissioner said this weekend that "if it's possible to restart negotiations, I am prepared to do so".

"If talks do restart, he added, "then European government funding will have to adapt to the outcome of those negotiations".

"Last night, a spokesman for Mandelson confirmed that "if and when negotiations [with the US] restart, then the aid for the A350 will have to be adapted".


http://www.telegraph.co.uk/money/mai...t=/portal/2005/09/25/ixportal.html
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 8:47 pm

Quoting NAV20 (Reply 18):
I don't think it was his political instincts that got him into trouble, Panam!

NAV20 with respect, I cannot agree. He personally interferred with the passport applications of two Industrialists in addition to taking out a loan that appreared to be (ahem) non-refundable (gotta love the irony) until he got caught with his hand in the cookie jar. That's very poor political judgement no matter which way you look at it and, again, it cost him a Ministry Portfolio not once but twice. Good politicians avoid that sort of stuff.

Quoting NAV20 (Reply 18):
"If talks do restart, he added, "then European government funding will have to adapt to the outcome of those negotiations".

He speaks for the EU. So let's see what Mr Humbert has to say about how they can "adapt" their funding sources, from the FT.

The company, which employs 53,000 people, plans to control the growth in hiring by boosting productivity and transferring more work to external suppliers, the newspaper said. Airbus expects to cut unit costs by as much as 7 percent a year.
Humbert said the company plans to reach an agreement by the end of the year that would make the Chinese aerospace industry a partner in Airbus' development program for the long-range A350, the newspaper reported.


It would appear that EADS/Airbus are readying themselves for increased productivity gain's and risk sharing partners. What Mr Humbert mentions with regards to China is no different to what Boeing is doing with Japan.

Quoting NAV20 (Reply 18):
This (later) quote probably sums up what Mandelson is thinking better. He's dead against launch aid for the A350:-

My point exactly. Focus on what's being said today and not in April with Mr Zoellick, as they say, "A week is a long time in politics". Nor do I agree that he is dead against launch aid for the A350, from the article you post;

Quoting NAV20 (Reply 18):
"Europe must be prepared to reconsider any launch aid for the A350, the new Airbus plane, if talks with the US on aircraft subsidies restart, Peter Mandelson has warned.

Operative word, reconsider, that, combined with Mr Humbert's recent statements seem to imply that is exactly what the EU is doing and they appear to be considering Tax Breaks and Risk Sharing partners such as the U.S. do as way of being able to resolve the issue.

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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:06 pm

The interesting question for me, Panam, is whether (given that it seems unlikely to get a firm commitment to launch aid in the next few days) the EADS/Airbus Board gives the go-ahead for the A350 at its October meeting, or delays the launch again.
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Aither
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:15 pm

This is amazing to talk so much about A350 launch aids in this matter, while at the same time the 787 is receiving more government aids.

Fact is the 787 financing does not comply with the 1992 agreement, so the U.S. unilateraly said it was not valid anymore, accusing Airbus - which always complied to the agreement - of unfair competition...

By doing so - the best defense is to attack - this had prevented Airbus of accusing the 787 illegal funding. We must recognize that this is very well done by Boeing. As many posts demonstrate, this strategy was quite effective as Airbus really look like the bad guy in this story.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:23 pm

Quoting NAV20 (Reply 20):
The interesting question for me, Panam, is whether (given that it seems unlikely to get a firm commitment to launch aid in the next few days) the EADS/Airbus Board gives the go-ahead for the A350 at its October meeting, or delays the launch again.

Interesting question. Ask Mr Forgeard or Mr Leahy and Launch is at the next Board meeting. We know they're talking about 200 A350 orders/commitments by years end so they do need to act fast. Though it would appear the politicians have delivered on launch aid should they require it.

Sept. 22 (Bloomberg) -- Airbus SAS, the world's largest commercial planemaker, said European governments have promised loans to cover a third of the 4.35 billion euros ($5.28 billion) needed for a new jet to compete with Boeing Co.'s new model.

IMHO, yes, they will proceed with launch should they be in a position to do so which, to me, they appear to be. Assuming the Board meeting proceeds as scheduled.

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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:33 pm

Thing is, the Board meeting isn't 'scheduled' yet, as far as I know. it was originally supposed to be in September.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:42 pm

Quoting Aither (Reply 21):
This is amazing to talk so much about A350 launch aids in this matter, while at the same time the 787 is receiving more government aids.

Fact is the 787 financing does not comply with the 1992 agreement, so the U.S. unilateraly said it was not valid anymore, accusing Airbus - which always complied to the agreement - of unfair competition...

By doing so - the best defense is to attack - this had prevented Airbus of accusing the 787 illegal funding. We must recognize that this is very well done by Boeing. As many posts demonstrate, this strategy was quite effective as Airbus really look like the bad guy in this story.

come on now, man! where are your sources? the 787 is getting MORE launch aid from the US government than the a350 will get from the EU? what is this based on? where are your facts and figures?

posts like this are akin to "i love my country so they are always right and the other countries always cheat." nonsense.
 
milan320
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:46 pm

Quoting GARPD (Reply 5):
I see no such suggestion in the linked article

You may not, but look through a few to get a better picture.
See bottom of this one, exactly what Scorpio was saying:
http://www.forbes.com/finance/feeds/afx/2005/09/26/afx2242989.html

Like the Reuters slogan though Reuters.com - No Spin. No Agenda. Just the Facts. As they happen.  wink 
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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 9:56 pm

Any discussion of what the WTO may decide is pure speculation. Any WTO decision is probably at least a year off, minimum.

But, as Aither points out above, Boeing have played their cards cleverly. Airbus appears to need the launch aid NOW - not after it has been sub judice at the WTO for many months.

So it will be interesting to see if they decide to risk their own money this time........
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milan320
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:01 pm

Quoting Tockeyhockey (Reply 24):
come on now, man! where are your sources? the 787 is getting MORE launch aid from the US government than the a350 will get from the EU? what is this based on? where are your facts and figures?

The 787 is getting launch aid, or more specifically the Japanese Aerospace industry - oh and before I get flamed, I'm not complaining, just showing that the 787 is getting launch-aid, but in this case from the Japanese:

from the Economist:
http://www.economist.com/business/displayStory.cfm?story_id=3793314

The new Boeing 787 is being built with the heavy-industry divisions of Mitsubishi, Kawasaki and Fuji, in a consortium known as the Japanese Aircraft Development Corporation (JADC). According to an assessment by David Pritchard and Alan MacPherson of the State University of New York, Buffalo, JADC is being offered at least $1.5 billion in soft loans repayable only if the aircraft is a commercial success, like the launch aid enjoyed by Airbus.


And another one:
http://www.economist.com/displayStory.cfm?story_id=4102198
Japan's role in Boeing's 787 programme is to be financed partly by the Japanese taxpayer. Negotiations between the government and the Japanese Aircraft Development Corporation (JADC) have been going on for a year over the terms of $1.6 billion-worth of launch aid to enable JADC to meet Boeing's needs. This mirrors the launch aid that Airbus is seeking for its rival A350, indeed it amounts to 50% more aid.


-Milan320

[Edited 2005-09-26 15:04:27]

[Edited 2005-09-26 15:05:16]

[Edited 2005-09-26 15:06:42]
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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:09 pm

Milan320, no-one (not even the US Government) had any objection to 'launch aid' being given to Airbus in the early days, to 'kickstart' a new major aircraft industry that mainland Europe didn't have. The objection nowadays is that Airbus is fully-established, with 50% of the world market, and it no longer needs it.

The 'launch aid' being offered in Japan may well be viewed by the WTO as a 'kick-start' measure of the same kind.

Interesting that Mitsubishi is involved, too. I believe that Daimler-Chrysler own 30% of Mitsubishi. Same as they own 30% of EADS/Airbus. 'Small world', as they say.......
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airways45
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:14 pm

Couple of comments.

American's call it subsidy, Europeans call it 'repayable launch aid'. Whatever it is called, the key is that if the aircraft doesn't sell, Airbus doesn't have to repay.

However - here's the deal. Airbus aircraft DO sell. They sell like hot cakes. This has upset Boeing with Airbus outselling Boeing over the last few years and out delivering them. Also, Airbus R&D spending has been higher than Boeing's civil spending.

I cannot think of a situation where, over a 20 or 30 year period, Airbus would actually make a dud. I don't believe Boeing would either. The whole point of the delaying tactic for new aircraft is to secure enough orders to make a project reliable whether A350, A380 or 787.

Whether or not the A350 is as good as a 787 is up for debate. However, I'm sure there are few of us out there that don't think it will sell. Whether it will sell as many as the 787 will remain to be seen. However, I cannot imagine a situation whereby the 'subsidy' or repayable launch aid will not have to be repaid.

So, if it is repaid what's the problem? Many of my North American friends believe the aircraft is subsidized in that tax payers money is pumped in, with no money coming back to the tax payer at the end of it. The truth is that European Governments have been collecting royalties from Airbus for previous launch aid even once the money and interest have been paid off.

So, the crux of the issue is whether they have to pay back the money. I believe this is a smoke-screen since it is hardly likely that either Boeing or Airbus would make an aircraft that wouldn't at least achieve its pay back level.

In addition, my own opinion is that Boeing was sailing close (if not breaking) the agreement itself through aid provided to the 787 from Washington State and Kansas.

The State of New York University estimated that Boeing was receiving $1.5bn in soft repayable loans (Airbus style, not repayable if the 787 fails) from Japan via the Japanese Aircraft Development Corporation.

It's a complicated mess. However, in my view, both sides are partly right. And, it is likely that the WTO will rule that both sides broke the rules in the same way that they ruled against Embraer and Bombardier. In this example, neither Brazil nor Canada applied sanctions and, wait for it, the subsidies continued for both sides.

The only people who see a WTO action as worthwhile are the lawyers!
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:18 pm

Quoting NAV20 (Reply 23):
Thing is, the Board meeting isn't 'scheduled' yet, as far as I know. it was originally supposed to be in September.

Yes, it was rescheduled to early October. Good enough for me at this point.

Airbus expects its parent companies, European Aeronautic, Defense & Space Co. and BAE Systems Plc, to approve development and construction of the plane in early October, Humbert said.

Quoting Milan320 (Reply 27):
The 787 is getting launch aid, or more specifically the Japanese Aerospace industry - oh and before I get flamed, I'm not complaining, just providing a source:

Milan320 Thank you for providing the source and with the utmost respect I ask that you take my answer in the true spirit of conversation and recognise that I am not "flaming" you.

Put simply. Japanese subsidies to their Aerospace Industry are a domestic political issue. Neither the EU or the U.S. has taken up the issue with the Japanese due to the fact they have no desire to interfere with internal policy decisions of Japan. The same will apply to China. They need to nurture their Aerospace Industry and any Chinese participation in the A350 program will most likely benefit from similar Loan agreements. But that's a Domestic Policy decision by China and neither the EU nor the U.S. will object should they proceed in that manner to fund their participation.

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airways45
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:26 pm

Quoting PanAm_DC10 (Reply 30):
Neither the EU or the U.S. has taken up the issue with the Japanese due to the fact they have no desire to interfere with internal policy decisions of Japan.

Or more likely because both have been getting or wanting Japanese launch aid, as have their respective engine OEMs.

Airways45
 
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:28 pm

Quoting NAV20 (Reply 28):
Milan320, no-one (not even the US Government) had any objection to 'launch aid' being given to Airbus in the early days, to 'kickstart' a new major aircraft industry that mainland Europe didn't have. The objection nowadays is that Airbus is fully-established, with 50% of the world market, and it no longer needs it.



Quoting PanAm_DC10 (Reply 30):
Milan320 Thank you for providing the source and with the utmost respect I ask that you take my answer in the true spirit of conversation and recognise that I am not "flaming" you.

No worries, I only put it as a pre-amble because I know what these discussions come out to eventually.
As to your answer, I completely agree. Nothing wrong with helping out a start-up if you will.

I provided the links, as I did before in a separate thread a while back, to those who believe that there is no subsidy of the 787 whatsoever.
However, I'm not saying that either you, PanAM_DC10 nor Nav20 dispute that ... but as usual, there will be some on here who will think otherwise.
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columbia107
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:34 pm

Quoting Milan320 (Reply 27):
The 787 is getting launch aid, or more specifically the Japanese Aerospace industry - oh and before I get flamed, I'm not complaining, just showing that the 787 is getting launch-aid, but in this case from the Japanese:

Ah Milan 320, but Boeing have a contract with its Japanese partners in the 787 venture which calls for the delivery of manufactured items which will eventually form part of a 787 aircraft. How the Japanese industry finance their manufacturing is their concern. Not Boeing's!

Boeing simply goes out and contracts third party entities to produce the goods.

On the otherhand, EU subsidies are directly made to Airbus or its non public shareholders (for the lack of a better word) i.e. British Aerospace and EADS. That represents state aid which I believe within the EU's finance industry is non acceptable. It seems to me there are double standards prevailing within the EU.
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:36 pm

Quoting Milan320 (Reply 32):
but as usual, there will be some on here who will think otherwise.

Exactly and I hope that you can see I've tried to be balanced with my input though as you point out there will some that just don't get the picture. I'm outta here now!

Regards, PanAm_DC10

P.S. Airways45, one word to reply #31 Bingo!  Wink
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milan320
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:37 pm

Quoting Columbia107 (Reply 33):
Ah Milan 320, but Boeing have a contract with its Japanese partners in the 787 venture which calls for the delivery of manufactured items which will eventually form part of a 787 aircraft.

Re-read what I said, I said, "more specifically - the Japanese Aerospace industry"
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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:40 pm

Newsweek's Paris correspondent, Carol Matlack, seems to have matchless contacts within Airbus (and possibly the Elysee Palace  Smile) and is often the first to spot a trend. Apologies for quoting yet another article written in April 2005, PanAm  Smile - but this one might turn out to have been prophetic:-

"Yet the longer the fight goes on, the greater the risk to the A350, Airbus' answer to the 787. Airbus wants to get the plane airborne by 2010, two years after the Dreamliner is scheduled to enter service. Development of the 787 is already well under way, with supply contracts awarded and 64 firm orders in hand from airlines. Airbus, by contrast, is still in the delicate early stages of canvassing prospective customers before settling on the A350's design. Customers are likely to push for changes, such as enhanced fuel efficiency, so the A350 could come close to matching the 787's promised 20% fuel savings. But alterations would increase the A350's expected $5.2 billion in startup costs. Uncertainty over how Airbus will finance those outlays is likely to spook potential customers and contractors alike, says Richard L. Aboulafia, an aviation analyst with Virginia-based Teal Group Corp.

"Indeed, Airbus doesn't have much cash to spare for a big new project, even though the company posted an impressive 42% gain in operating profits in 2004, to $2.5 billion, on sales of $26 billion. But its parent, EADS, was left with only $2.3 billion in free cash flow last year, 16% less than in 2003, after shelling out more than $2 billion for research and development on the A380. What's more, the dollar's continued weakness has pushed up the cost of the A380. Philippe Camus, the outgoing EADS co-CEO, says that at the current exchange rate the megaplane will break even several years later than expected.

"Couldn't the European governments just fork over the loans for the new A350 and take their chances on a fight at the WTO? EU and EADS officials have said they are prepared to do just that if the Americans don't make concessions, such as ending Boeing's practice of relying on foreign contractors, mainly in Japan, who in turn receive aid from their own governments. But the new EU Trade Commissioner, Peter Mandelson, is eager to avoid that scenario. "He feels it's important that this issue not contaminate other EU-U.S. relations," a source close to Mandelson says. Rather than risk a trade war -- which also could jeopardize efforts to sell air-refueling tankers to the U.S. Air Force -- EADS will probably settle for the best negotiated deal it can get. But if Airbus can no longer get government loans, it will have to build the A350 on an extra-lean budget, foregoing some improvements that could bolster its chances against the 787.

"With such strong headwinds, some Airbus watchers suspect that Forgeard will try to keep steering the company even after he moves over to EADS. Perhaps -- but he'll have plenty of other things to keep him busy. EADS is scrambling to bulk up its defense business, particularly in the crucial U.S. market, to offset its dependence on the cyclical commercial-plane business. Forgeard also may need to mend fences with DaimlerChrysler (DCX ), EADS' chief German shareholder. The Germans swatted down a French proposal last year to name Forgeard as the sole CEO, replacing the current Franco-German dual CEO arrangement. They also recently vetoed a suggestion that EADS seek a merger with French defense company Thales Group. A smooth flight for EADS and Airbus? Not likely."


http://www.businessweek.com/magazine/content/05_14/b3927067_mz054.htm
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columbia107
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:54 pm

Quoting Milan320 (Reply 35):
Quoting Columbia107 (Reply 33):
Ah Milan 320, but Boeing have a contract with its Japanese partners in the 787 venture which calls for the delivery of manufactured items which will eventually form part of a 787 aircraft.

Re-read what I said, I said, "more specifically - the Japanese Aerospace industry"

You are indeed correct.
I however was simply highlighting that the Japanese Aerospace industry subsidies does represent that Boeing's 787 is receiving government subsidies
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luisca
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 10:57 pm

Quoting Airways45 (Reply 31):
Or more likely because both have been getting or wanting Japanese launch aid, as have their respective engine OEMs.

As it was stated above, The japanese soft loans are a kick start for an industry that does not exist as of now (What was the last SUCCESFUL japanese plane?) The Problem with Airbus is that after 30 years and being number 1 in the market, they continue to recieve aid for kick starting. After the company is established, it should go on its own.

About the tax breaks that Boeing gets, states offer these incentives all the time to help boost labor in their states, this is not new and is not illegal. The benefits far outweigh the cost.
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NumberTwelve
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 11:02 pm

Just another subsidies thread.
It's a matter of interpretation and I highly doubt that anybody here in this forum has the exact knowledge to judge one of the big competitors.

You may call it subsidies, anyway. Nobody cared about the "subsidies" as long as the other side had lots of butter on it's bread. As soon as butter is out, everybody is whining. Old story.
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atmx2000
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 11:26 pm

Quoting Airways45 (Reply 29):
American's call it subsidy, Europeans call it 'repayable launch aid'. Whatever it is called, the key is that if the aircraft doesn't sell, Airbus doesn't have to repay.

However - here's the deal. Airbus aircraft DO sell. They sell like hot cakes. This has upset Boeing with Airbus outselling Boeing over the last few years and out delivering them. Also, Airbus R&D spending has been higher than Boeing's civil spending.

I cannot think of a situation where, over a 20 or 30 year period, Airbus would actually make a dud. I don't believe Boeing would either. The whole point of the delaying tactic for new aircraft is to secure enough orders to make a project reliable whether A350, A380 or 787.

But the A350 is replacing the A330 and the A342/3. Are you saything that the loans for the older generation will be paid off before the A350 comes to market? I find that unlikely given that the latter is a slow seller in the face of the 777, and that the former is going to be replaced by the A350 and 787 as well.
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NAV20
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 11:35 pm

Helluva good point, Atmx2000.

"Dear taxpayer, please will you give us more 'launch aid' to compete with the models you helped us launch earlier."  Smile
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
mrniji
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RE: EU Says Airbus Subsidies Must Be "curbed"

Mon Sep 26, 2005 11:40 pm

Quoting NumberTwelve (Reply 39):
You may call it subsidies, anyway. Nobody cared about the "subsidies" as long as the other side had lots of butter on it's bread. As soon as butter is out, everybody is whining. Old story.

The point is that the wannabe experts here don't realize that jobs, jobs, jobs, jobs is the most important nowadays. And may they be created, on whatsoever costs ever. If my taxmoney is spent for job-creating initiatives in the private sector (and in future propoerous markets, something that can be sustained out of own strength), I am the first one to be happy that my money was spent properly.

Hence: go ahead with subsidies, as long they are distributed properly. And OK, Boeing and the US might object, but they can do the same, I am fine with that, beforer mourning that competition is distorted
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atmx2000
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:04 am

Quoting Mrniji (Reply 42):
Hence: go ahead with subsidies, as long they are distributed properly. And OK, Boeing and the US might object, but they can do the same, I am fine with that, beforer mourning that competition is distorted

You are ignoring the effects of a subsidy war and distorted competition, which are reduced profits from the over subsidized industry. Also you are ignoring the effects that paying for higher subsidies through higher taxes has on companies and workers in other industries. Something is clearly not working in the economic model of many European countries, and that is why they have such high unemployment.

I would suggest that rather than directly subsidizing industry, the EU should reduce income and consumption taxes to stimulate domestic retail sales (and create jobs to satisfy domestic needs) and lower costs for workers so that they don't need to be paid as much. This will also help developing countries as they will have more consumers for their products.
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Joni
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:11 am

Quoting Tockeyhockey (Reply 24):
come on now, man! where are your sources? the 787 is getting MORE launch aid from the US government than the a350 will get from the EU? what is this based on? where are your facts and figures?

I don't think that it's ever been in doubt that the 787 gets more taxpayer subsidies than the 350. The Japanese government is funding the plane, as is the State of Washington to the tune of USD 3B - and that's non-repayable aid.
 
airways45
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:16 am

Hi everyone -

Here's a great article which is very balanced on both sides - provides some interesting facts and figures:

http://acuf.org/issues/issue40/050724gov.asp
 
mrniji
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:22 am

Quoting Atmx2000 (Reply 43):
You are ignoring the effects of a subsidy war and distorted competition, which are reduced profits from the over subsidized industry. Also you are ignoring the effects that paying for higher subsidies through higher taxes has on companies and workers in other industries. Something is clearly not working in the economic model of many European countries, and that is why they have such high unemployment.

Subsidies per se are NOT bad, it only depends on the extent and conceptualization. Instead of having a subsidy war, it is also possible to "agree" on subsidies sector/country-wise. the causal effects you show are in my eyes far too simplified. And.. something DID work in Europe in the past.. it is just insane that the transformation into the full-fledged global economy happens without transition phase. Every country/region needs its own system

Quoting Atmx2000 (Reply 43):
I would suggest that rather than directly subsidizing industry, the EU should reduce income and consumption taxes to stimulate domestic retail sales

Europe has another history and is another case. There are no globally verified valid economic laws. The sense of solidarity ought not to be lost - look at britain: economically successful with what you suggest, but inequality rising!
"The earth provides enough resources for everyone's need, but not for some people's greed." (Gandhi)
 
lh477
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:38 am

I find it amusing that the American gov't is using the WTO when it suits their fancy. For somemany years now, the WTO has consitently ruled against the US imposed duties softwood lumber from Canada, yet the American's continue to ignore the rulings.

Sorry, went a little of topic
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atmx2000
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:48 am

Quoting Mrniji (Reply 46):
something DID work in Europe in the past

It is easy to find growth when you are recovering from a war and a path for economic and technological development has been trail-blazed by someone else. But once you catch up, you have to start innovating a lot faster, rather than just copying someone else, especially when the developing world figures out what you figured out a few decades ago and encroaches on turf you previously held.

Quoting Mrniji (Reply 46):
economically successful with what you suggest, but inequality rising!

I don't see why we should celebrate the everyone having the same mediocre living standards for the sake of "equality".

[Edited 2005-09-26 17:52:40]
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mrniji
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RE: EU Says Airbus Subsidies Must Be "curbed"

Tue Sep 27, 2005 12:53 am

Quoting Atmx2000 (Reply 48):
It is easy to find growth when you are recovering from a war and a path for economic and technological development is laid out for you by someone else. But once you catch up, you have to start innovating a lot faster, rather than just copying someone else, especially when the developing world figures out what you figured out a few decades ago and encroaches on turf you previously held.

Agreed with the quintessence - your war argument works well. However, now the times have changed. And instead of trying to tarket a full growth (highest maximum) of, let's say 10 % for 10 yrs, and 2 % thereafter, better target 5 % for 30 yrs and have it sustainable. The WB idea of "maximum possible growth for development" that (of course) distributes itself automatically withinthe country, does not work within developing countries

Quoting Atmx2000 (Reply 48):
I don't see why we should celebrate the everyone having the same lousy living standards for the sake of "equality".

And I do not see in further decreasing the relative wealth of rather deprived people for the benefit of few managers. What is politic and economic growth for? For some few people to have a glorious living standard, or something that should reach as many people as possible?
"The earth provides enough resources for everyone's need, but not for some people's greed." (Gandhi)