EI321
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EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 12:17 am

I had to shorten the title a little.

EU criticizes U.S. defense of alleged Boeing subsidies

Quote:
GENEVA: The United States submitted a weak defense of the billions of dollars it pays in subsidies to Boeing Co., the European Union said Tuesday as the two sides began World Trade Organization hearings over their rival claims of illegal financing for airplane makers.

Brussels also rejected as "absurd" a US$205 billion (€148.3 billion) evaluation by Washington of the benefit France-based Airbus has received as a result of European government support. The U.S. accuses the company of receiving billions in so-called launch aid from the bloc and its member states, which would have amounted to much higher costs if the loans were given at commercial rates.

http://www.iht.com/articles/ap/2007/...ess/EU-FIN-ECO-WTO-Plane-Fight.php


Will this ever end? They need to come to some kind of an agreement.
 
masseybrown
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 12:31 am

I don't think an agreement will be reached over this issue anytime soon. Other countries (Brazil, China, Russia, and maybe Japan) are determined to maintain aircraft production within their borders and provide subsidies as well.

Let's just hope the argument doesn't get to the point of countervailing duties, raising costs for everyone.
 
cygnuschicago
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 2:14 am

Quoting EI321 (Thread starter):
Brussels also rejected as "absurd" a US$205 billion (€148.3 billion) evaluation

$205 bn? Wow, what's that - about 10 A380 programs? Airbus must be running a lot of stealth projects  Wink
If you cannot do the math, your opinion means squat!
 
EI321
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 2:24 am

Quoting CygnusChicago (Reply 2):
Quoting EI321 (Thread starter):
Brussels also rejected as "absurd" a US$205 billion (€148.3 billion) evaluation

$205 bn? Wow, what's that - about 10 A380 programs? Airbus must be running a lot of stealth projects

Its a crazy figure. I'd love to see the breakdown of it.
 
airfrnt
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 2:28 am

Quoting EI321 (Reply 3):
Its a crazy figure. I'd love to see the breakdown of it.

Most of it is probably in the 20 years that Europe paid to keep Airbus (and it's distinct elements) alive before the A320.
 
EI321
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 2:33 am

Quoting AirFrnt (Reply 4):
Quoting EI321 (Reply 3):
Its a crazy figure. I'd love to see the breakdown of it.

Most of it is probably in the 20 years that Europe paid to keep Airbus (and it's distinct elements) alive before the A320.


Before the A320, airbus had delivered approx 400 aircraft. Even if we take a sale price of $120m for each, thats still just revenues of $48b, assuming that the EU paid for 100% (ie the airlines got them for completely free!) of each of these aircraft which is of course complete nonsense.

Quote:
"If the U.S. methodology were to be applied to the massive federal, state and local subsidies benefiting Boeing, the amount challenged by the EU would be not US$23 billion (€16.6 billion), but rather US$305 billion (€220.7 billion)," the EU said.

[Edited 2007-07-24 19:39:37]
 
oldeuropean
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 2:44 am

Quoting AirFrnt (Reply 4):
Most of it is probably in the 20 years that Europe paid to keep Airbus (and it's distinct elements) alive before the A320.

This figure also would be absurd, when it would have been the subsidies beginning from the start of Airbus in the 70th and we would include the development of the Concorde ...
... and the BAC 111...
... and the VC10
... and the VFW 614 ...
... and ...  Yeah sure

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GBan
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 3:00 am

Quoting EI321 (Thread starter):
Will this ever end? They need to come to some kind of an agreement.

My bet: Take the number of posts this thread will have in the next seven days and it will be equal to the number of month' we have to wait until this 'fight' ends...
 
airfrnt
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 8:00 am

Quoting EI321 (Reply 5):


Before the A320, airbus had delivered approx 400 aircraft. Even if we take a sale price of $120m for each, thats still just revenues of $48b, assuming that the EU paid for 100% (ie the airlines got them for completely free!) of each of these aircraft which is of course complete nonsense.

How many years did Airbus not sell a single plane, or less then 10?
 
Analog
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 12:05 pm

Quoting EI321 (Reply 5):

Before the A320, airbus had delivered approx 400 aircraft. Even if we take a sale price of $120m for each, thats still just revenues of $48b, assuming that the EU paid for 100% (ie the airlines got them for completely free!) of each of these aircraft which is of course complete nonsense.

Who says subsidies are limited to 100% of sale prices? Implying that such a limit exists also implies that a gifted airplane costs nothing to make. Say each $120m aircraft cost $500m, including development costs (yes, probably absurd, but for argument's sake). Then a $380m/aircraft subsidy would be in order. Of course that's still only $152b....
 
EI321
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Wed Jul 25, 2007 7:24 pm

Quoting Analog (Reply 9):
Quoting EI321 (Reply 5):

Before the A320, airbus had delivered approx 400 aircraft. Even if we take a sale price of $120m for each, thats still just revenues of $48b, assuming that the EU paid for 100% (ie the airlines got them for completely free!) of each of these aircraft which is of course complete nonsense.

Who says subsidies are limited to 100% of sale prices? Implying that such a limit exists also implies that a gifted airplane costs nothing to make. Say each $120m aircraft cost $500m, including development costs (yes, probably absurd, but for argument's sake). Then a $380m/aircraft subsidy would be in order. Of course that's still only $152b....

Im at a complete loss to explain how they could come up with such a massive figure. $205b equates to the value of approx 6300 A320s!!!! *

*205,000,000,000 / [50,000,000 - 35%] = 6307
 
airfrnt
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 3:26 am

Quoting EI321 (Reply 10):
Im at a complete loss to explain how they could come up with such a massive figure. $205b equates to the value of approx 6300 A320s!!!! *

You keep ignoring what people have mentioned that Airbus (and it's components) were completely subsidized through multiple years of selling not a single plane. Is the number inflated, of course it is, just like any number that comes from Airbus about Boeing is inflated beyond reason. But remember that the US/EU billaterial that limited launch aid to 30% was acceptable to the US simply because it was massivly better then the huge dumping Europe had done before.
 
gbfra
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 3:36 am

Both parties know very well that the figures presented by each of them aren't worth the paper on which they are written. No reason to take these figures seriously.

But there is another issue that seems quite interesting (to me, at least).

The US and the EU could most probably reach a bilateral agreement outside of the WTO which would satisfy both of them. In this case, however, other countries like Russia, China, Brazil...would not be included.

If the US and the EU want a deal that includes other countries this deal would have to be negociated at the WTO. In this case the US and the EU would no longer control the negociations. The result of this deal might not satisfy the US or the EU....or both.

Afaik, both parties have called the WTO but at the same time they have until now done everything to delay the procedure. Because, in reality, neither the US nor the EU want the WTO to decide.
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scbriml
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 4:40 am

Quoting AirFrnt (Reply 11):
it was massivly better then the huge dumping Europe had done before

Which huge dumping was that then?
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PPVRA
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 4:50 am

Quoting MasseyBrown (Reply 1):
Other countries (Brazil, China, Russia, and maybe Japan) are determined to maintain aircraft production within their borders and provide subsidies as well.

Actually, not completely. The Brazilian government has asked the WTO to rule against subsidies. According to the article, our delegation insisted that subsidies for companies is not a requirement to participate in the industry, giving the example of how Embraer's E-jets were designed and built without government subsidies.

From the Brazilian press.
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airfrnt
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:52 am

Quoting Scbriml (Reply 13):

Which huge dumping was that then?

The billions of dollars that kept the various civil aviation efforts afloat while Airbus failed to sell planes.
 
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 6:42 am

Quoting AirFrnt (Reply 15):
The billions of dollars that kept the various civil aviation efforts afloat while Airbus failed to sell planes.

What you're describing is not dumping. But now I see what you're driving at.

Quoting AirFrnt (Reply 11):
You keep ignoring what people have mentioned that Airbus (and it's components) were completely subsidized through multiple years of selling not a single plane.

During which multiple years did Airbus not sell a single plane?
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 11:21 am

Quoting CygnusChicago (Reply 2):
$205 bn? Wow, what's that - about 10 A380 programs? Airbus must be running a lot of stealth projects

Dude... I knew Elvis had a new jet.  Wink

Lightsaber
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XT6Wagon
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 11:28 am

1 billion in 1970 is not the same as 1 billion today. So if you adjust all the ammounts for inflation, then you can get some rather stunning numbers.
 
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 11:53 am

Quoting AirFrnt (Reply 8):
How many years did Airbus not sell a single plane, or less then 10?



Quoting AirFrnt (Reply 11):
multiple years of selling not a single plane



Quoting AirFrnt (Reply 15):
while Airbus failed to sell planes

You keep bringing this up. I don't know where you get your information from but here are the facts. In no year did Airbus fail to sell a single plane. So "multiple years of selling not a single plane" is wrong and I'm sure you'll be happy to admit your error.

Here's the worst years

1976 1
1983 7
1975 16
1977 16
1982 17
1974 20
1984 35
1993 38
1980 47
1981 54
1978 73
1985 92

In every other year they have sold more than 100.

If you want decades:

1974-1983 = 378 (or 38 a year)
1984-1993 = 1678 (or 168 a year)
1994-2003 = 3528 (or 353 a year)

Do with those statistics what you will but please stop inventing your own.
 
airfrnt
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 1:39 pm

Quoting PM (Reply 19):
If you want decades:

1974-1983 = 378 (or 38 a year)
1984-1993 = 1678 (or 168 a year)
1994-2003 = 3528 (or 353 a year)

Do with those statistics what you will but please stop inventing your own.

My source for that statement was Airbus's own book on the A380.

[Edited 2007-07-26 06:40:28]
 
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 2:12 pm

Quoting AirFrnt (Reply 20):
My source for that statement was Airbus's own book on the A380.

In which they said what? That in "multiple years" they sold "not a single plane"? It seems unlikely.

My source is here:

http://www.airbus.com/en/corporate/orders_and_deliveries/

Click on "O&D 1974-2006" in the Key Documents box on the left.
 
XT6Wagon
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 4:30 pm

Quoting PM (Reply 21):
In which they said what? That in "multiple years" they sold "not a single plane"? It seems unlikely.

My source is here:

http://www.airbus.com/en/corporate/orders_and_deliveries/

Click on "O&D 1974-2006" in the Key Documents box on the left.

Airbus existed prior to 1974, and in fact had a plane flying prior to 1974. They recently highlighted this in that epic piece of false advertising where it was stated that they created the first widebody.

so... Clearly if orders start in 1974, and they had the A300 flying in 1972.... With a program that started in late 1967. So from 1967 when the governments agreed to start a joint program to 1974 there was apparently 0 orders, despite laying out money to develop and in fact start flying the plane.
 
Shenzhen
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 4:42 pm

1 million dollars compounded at a 8 percent interest rate over 40 years is nearly 22 million today.
 
MCIGuy
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:02 pm

How much trade does the US actually do with Europe? What would be the consequences of just telling them to pound mud?
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PM
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:10 pm

Quoting XT6Wagon (Reply 23):
So from 1967 when the governments agreed to start a joint program to 1974 there was apparently 0 orders, despite laying out money to develop and in fact start flying the plane.

Ah, I'm with you now. So the allegations of subsidising go back - well, virtually indefinitely. Why stop in 1967? I believe there was UK government involvement in the VC-10 and Brabazon and, I suppose, much else besides. The French, no doubt, gave Sud Aviation some help with the Caravelle. I don't know how you unpick this one or how far back you go. What if the UK government paid Rolls-Royce and Bristol to conduct research into jet engines during WW2. Is that a 'subsidy'? I suppose it is. But then did Boeing learn a thing or two by building the B-47 and B-52 which helped them build the 707? I assume so.

But if AirFrnt's three references to Airbus selling no planes or fewer than 10 were all concerned with the period 1967-1973 then I clearly misunderstood. Apololgies.

One other thought. 'Airbus' may not have sold any planes between 1967 and 1973 but HSA, MBB and Sud Aviation (or was it already Aerospatiale?) had product lines and were certainly selling things. I remember watching Hawker Siddeley Harriers from my bedroom window in 1970. They owned Airbus. The idea that Airbus had no source of money other than European taxpayers until A300s started to roll off the assembly line is a little blinkered.
 
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:16 pm

Quoting XT6Wagon (Reply 23):
Clearly if orders start in 1974

No, the spreadsheet doesn't break out orders prior to 1974.

Quoting XT6Wagon (Reply 23):
Airbus existed prior to 1974, and in fact had a plane flying prior to 1974.

Airbus was formally created in 1970. The A300 first flew in 1972, at which point it had 15 orders.
http://en.wikipedia.org/wiki/Airbus_A300

Quoting XT6Wagon (Reply 23):
They recently highlighted this in that epic piece of false advertising where it was stated that they created the first widebody.

"Twin" was, as you well know, the missing word. A typo on a web page is false advertising?  rotfl 
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moo
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:26 pm

Quoting AirFrnt (Reply 15):
The billions of dollars that kept the various civil aviation efforts afloat while Airbus failed to sell planes.

Thank god European governments *did* subsidise Airbus.

Otherwise the world civil aviation market today would be dominated by America and America alone.
 
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:28 pm

Quoting MCIGuy (Reply 25):
How much trade does the US actually do with Europe? What would be the consequences of just telling them to pound mud?

Well, it would mean that all Airbuses would have RR from now on! Sounds good to me!  bigthumbsup   bouncy   highfive   hyper 

(What exactly does "pounding mud" involve?  Confused )
 
TYCOON
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:40 pm

For all the Boeing (Boeing, Lockheed and McDD) fans, do words like KC-135, KC-10 or the Lockheed C5A Galaxy ring a bell?
Well let me remind those who have cobwebs in their head:
KC-135 was a US government funded development project that Boeing led. The KC-135, initially developed for military transport purposes and refueling, later developed into the Boeing 707 (nothing was paid back to DoD). The contract for the Lockheed C5A Galaxy military contract was the contract Boeing was trying to get and they spent government funded research dollars to develop a plane to respond to the request. When they lost the contract to Lockheed, they created the Boeing 747 - so once again, government funded research led to the development of the 747.
And finally when McDonnell Douglas "threatened" to cancel production of the DC-10 in the early 1980s which would have led to significant job losses, guess what, the US government suddenly signed massive orders for... the KC-10 which was a military version of the DC-10 that allowed production to continue and help fund the MD-11.
So, my underlying argument: ALL GOVERNMENTS FUND IN SOME FORM OR OTHER CIVIL AIRCRAFT PROGRAMS.
This is all well documented... look it up. I did alot of research on this very subject when I was a student at MIT (they have a great Aeronautics library). It's amazing what you find when you just take a peek around at some government published documents........
 
MCIGuy
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 5:51 pm

Quoting PM (Reply 29):
(What exactly does "pounding mud" involve? )

Basically, it means the same thing as "kick rocks". It means to "go away" or "walk away", feet impacting on soil, thus "pound mud". It's an American thing.  Silly
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mbj2000
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 6:13 pm

Quoting TYCOON (Reply 30):
So, my underlying argument: ALL GOVERNMENTS FUND IN SOME FORM OR OTHER CIVIL AIRCRAFT PROGRAMS.
This is all well documented... look it up. I did alot of research on this very subject when I was a student at MIT (they have a great Aeronautics library). It's amazing what you find when you just take a peek around at some government published documents........

 checkmark 

Finally someone has understood... The only difference is that at the moment it seems, Boeing is much more cleverly investing the GOV money.
Like most of life's problems, this one can be solved with bending -- Bender Unit 22
 
XT6Wagon
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 6:34 pm

Quoting TYCOON (Reply 30):
For all the Boeing (Boeing, Lockheed and McDD) fans, do words like KC-135, KC-10 or the Lockheed C5A Galaxy ring a bell?
Well let me remind those who have cobwebs in their head:
KC-135 was a US government funded development project that Boeing led. The KC-135, initially developed for military transport purposes and refueling, later developed into the Boeing 707 (nothing was paid back to DoD). The contract for the Lockheed C5A Galaxy military contract was the contract Boeing was trying to get and they spent government funded research dollars to develop a plane to respond to the request. When they lost the contract to Lockheed, they created the Boeing 747 - so once again, government funded research led to the development of the 747.
And finally when McDonnell Douglas "threatened" to cancel production of the DC-10 in the early 1980s which would have led to significant job losses, guess what, the US government suddenly signed massive orders for... the KC-10 which was a military version of the DC-10 that allowed production to continue and help fund the MD-11.
So, my underlying argument: ALL GOVERNMENTS FUND IN SOME FORM OR OTHER CIVIL AIRCRAFT PROGRAMS.
This is all well documented... look it up. I did alot of research on this very subject when I was a student at MIT (they have a great Aeronautics library). It's amazing what you find when you just take a peek around at some government published documents........

Completely wrong. The KC-135 was developed entirely out of Boeings own pocket. It wasn't even supposed to be more than a "temporary" bridge order until the "real" tankers the USAF wanted arrived.

The 747 shared 0.000% of the program that developed Boeings offering for the C5 contract. The 747 project was the THRID ranking project at the time, and almost all of the people who did the C5 proposal were on the SST program. The rest would be doing contract work for NASA or other agencies.

The DC-10 was later modified into the KC-10. The military application was a offshoot of the EXISTING civil program. Only 60 were built, and the numbers in service are far lower today now that the SAC mission is no longer around. Your assertion that the KC-10 program was only to bail out Douglass, is... on the face of it stupid since the USAF has let contractor after contractor die regardless of performance. It was also selected in 1976, not in "the eighties" as you claim.

More over claiming that doing military work is a "subsidy" is on the face of it completely retarded. When you get it perfectly right, you make "cost plus". When you screw the pooch, it feels a whole lot more like the reverse. Even worse, doing exactly what is asked of you can grab you all kinds of negative press. Many media frenzy "Cost overruns" are not actual cost overruns but morons that take the Cost per frame for a fleet of 500, and freak when they seen the cost per frame once the order is reduced to 100 or less. No shit that the cost per frame goes through the roof when you do that crap. Making 100 Kia Rios a year would cost nearly the same as doing 100 Ferrari Enzos, but do 1/4 million Kia rios and the cost per car is trivial.
 
MCIGuy
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 6:50 pm

Quoting XT6Wagon (Reply 33):
on the face of it stupid since the USAF has let contractor after contractor die regardless of performance.

Yep, they don't award contracts to dying companies unless they offer the best product

Quoting XT6Wagon (Reply 33):
Moreover claiming that doing military work is a "subsidy" is on the face of it completely retarded.

A "subsidy" is basically charity. A contract is "build me X widget for $X".

Quoting XT6Wagon (Reply 33):
No shit that the cost per frame goes through the roof when you do that crap. Making 100 Kia Rios a year would cost nearly the same as doing 100 Ferrari Enzos, but do 1/4 million Kia rios and the cost per car is trivial.

The F-22 is a perfect example of that. There's a reason the program cost is $300M per frame. Flat-panel TVs are another prime example of that. Five years ago, you might have paid $10,000 or more for a TV that costs $2000 or less now and has more features. That's because few were buying so few were being made, it's called spreading development costs. Smile
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mbj2000
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 8:30 pm

Quoting XT6Wagon (Reply 33):
Completely wrong. The KC-135 was developed entirely out of Boeings own pocket. It wasn't even supposed to be more than a "temporary" bridge order until the "real" tankers the USAF wanted arrived.



Quoting XT6Wagon (Reply 33):
More over claiming that doing military work is a "subsidy" is on the face of it completely retarded. When you get it perfectly right, you make "cost plus". When you screw the pooch, it feels a whole lot more like the reverse. Even worse, doing exactly what is asked of you can grab you all kinds of negative press.

Oh really? So what's the point in accepting contracts from the Army if it's barely covering the development costs?
In your opinion, Boeing, Douglas etc did it just for the fame?  rotfl 

Obviously you cannot accept the facts, the US military is one of the biggest subsidy spreading machine worldwide...

http://news.bbc.co.uk/2/hi/business/6914291.stm
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XT6Wagon
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 9:02 pm

Quoting MBJ2000 (Reply 35):
Oh really? So what's the point in accepting contracts from the Army if it's barely covering the development costs?
In your opinion, Boeing, Douglas etc did it just for the fame?

because if you are good at it, you get job security. You don't rake in the big bucks, but its a steady check. Also many small companies try for it as that IS like hitting the jackpot. Go from a small machine-shop to a multi million or multi billion dollar company in just a few heartbeats. Then of course once you are in, you got to stay in. Got to support said company you built up to a large size to support your last contract. Its alot like riding a Lion, once you get on, you can't exactly get off without bad things happening.

Of course as of late corruption/no bid contracts has put some companies on the gravy train instead of Cost+.

Aviation sector however has alot more examples of losing ones shirt than trips to the Tahiti for everyone.
 
EI321
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Thu Jul 26, 2007 9:21 pm

Quoting AirFrnt (Reply 11):
Quoting EI321 (Reply 10):
Im at a complete loss to explain how they could come up with such a massive figure. $205b equates to the value of approx 6300 A320s!!!! *

You keep ignoring what people have mentioned that Airbus (and it's components) were completely subsidized through multiple years of selling not a single plane.

Im not ignoring ANYTHING. But thats a good way to mask what is a fickle agument to start with. Its well known that as a govt owned company, the formation of airbus was govt funded. That happens with all govt companies, its a no brainer.

What I am asking is that some of the people who are so eager to point the finger to attempt to demonstrate how the govts in question could possibly have given airbus a net payment of anything like $205 billion over the years, before we even consider that launch aid gets [/b]repayed[b] with interest.

What is the difference in percentage terms between the rate at which airbus borrows from the govts in question and the rates at which airbus and boeing borrow from commercial institutions? 1%? 2%? 3%?
 
baroque
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 12:01 am

Quoting EI321 (Thread starter):
Will this ever end? They need to come to some kind of an agreement.

No it will never end because some really think there are unjust practices - two way effort. But they WILL come to an agreement, otherwise someone else will tell them both something they really do not like!

Quoting AirFrnt (Reply 4):
Quoting EI321 (Reply 3):
Its a crazy figure. I'd love to see the breakdown of it.

Most of it is probably in the 20 years that Europe paid to keep Airbus (and it's distinct elements) alive before the A320.



Quoting EI321 (Reply 10):
Im at a complete loss to explain how they could come up with such a massive figure. $205b equates to the value of approx 6300 A320s!!!! *



Quoting Gbfra (Reply 12):
The US and the EU could most probably reach a bilateral agreement outside of the WTO which would satisfy both of them. In this case, however, other countries like Russia, China, Brazil...would not be included.

If the US and the EU want a deal that includes other countries this deal would have to be negotiated at the WTO. In this case the US and the EU would no longer control the negotiations. The result of this deal might not satisfy the US or the EU....or both.

Total production is probably close to the source of the number. My guess is that it is not early figures inflation adjusted out of belief, but is rather the total value of Airbus sales to some date (not the projected ones because then it would be more like 300 billion or 400!) with the sidedish of the arguments that ALL these sales were dependent on subsidies, so therefore the total value is the number to use. Of course, if someone decides that RLI was not a subsidy (seems possibly as the US agreed to that method) this number would not seem a really safe bet.

The odds are that the WTO ruling whatever it is will satisfy nobody.

Quoting PM (Reply 26):
Ah, I'm with you now. So the allegations of subsidising go back - well, virtually indefinitely. Why stop in 1967? I believe there was UK government involvement in the VC-10 and Brabazon and, I suppose, much else besides. The French, no doubt, gave Sud Aviation some help with the Caravelle. I don't know how you unpick this one or how far back you go. What if the UK government paid Rolls-Royce and Bristol to conduct research into jet engines during WW2. Is that a 'subsidy'? I suppose it is. But then did Boeing learn a thing or two by building the B-47 and B-52 which helped them build the 707? I assume so.

Sure was a subsidy. Mind you, all of it was only worth about GBP100,000 that being the compensation paid to Whittle IIRC for giving all his stuff to Rolls. But to the present matter, there will be an ongoing offset for all the technical information sent over with the early Power Jets and RR engines to the US. An ongoing royalty of all GE and PW and Allison sales equal to the A32x ongoing royalty would seem fair.

Quoting PM (Reply 29):
What exactly does "pounding mud" involve?

I don't like the explanation you got PM. I think it is the sensation you get from trying to read the EADS financials! Or the literature on RLI, or indeed any of the WTO submissions.

[Edited 2007-07-26 17:02:15]
 
TYCOON
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 12:27 am

XT6Wagon, brush up on the facts first. You are soooooo naive in your assertions as to be risible.
Just dig into congressional reports on military procurement - easily available from your local library - and see how and why decisions are made to procure one type of aircraft over another.
Another interesting comparison would be to look at how American hammered MDD for cost and time overruns on the MD-11 and how the US DoD was so soft handed on MD for similar (actually even bigger) cost overruns on the C-17. Following your logic, the US government should have been as tough on MDD as American was since it had an even larger order.
 
sllevin
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 7:19 am

Quoting TYCOON (Reply 30):
later developed into the Boeing 707 (nothing was paid back to DoD).

Acutally, Boeing paid the US government for the rights to use the design and research -- mainly because Douglas, Lockheed and Convair all complained that Boeing should NOT get such research for free.

Quoting TYCOON (Reply 30):
they created the Boeing 747 - so once again, government funded research led to the development of the 747.

Boeing's HLA proposal shared nothing with the 747.

Quoting TYCOON (Reply 30):
the US government suddenly signed massive orders for... the KC-10

And got airplanes. Not to mention that much of the KC-135 fleet was already going to be 15 years old before deliveries started.

Quoting TYCOON (Reply 30):
This is all well documented... look it up..

You might want to try that next time.

Steve
 
Shenzhen
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 8:08 am

Quoting EI321 (Reply 37):

Im not ignoring ANYTHING. But thats a good way to mask what is a fickle agument to start with. Its well known that as a govt owned company, the formation of airbus was govt funded. That happens with all govt companies, its a no brainer.

What I am asking is that some of the people who are so eager to point the finger to attempt to demonstrate how the govts in question could possibly have given airbus a net payment of anything like $205 billion over the years, before we even consider that launch aid gets [/b]repayed[b] with interest.

What is the difference in percentage terms between the rate at which airbus borrows from the govts in question and the rates at which airbus and boeing borrow from commercial institutions? 1%? 2%? 3%?

Its not just what was injected/borrowed/given to Airbus, its what that money would have cost Airbus since then, compounded, if they had pay it back today, which is what the US is asserting in several of the Airbus Programs.

Both Boeing and Airbus/ US and EU have probably already made an agreement to see this thru the WTO but take no action once the verdict/decisions are returned. This will allow them to flex their muscles if a third country (China/India) try to break into the large commercial market via state funding. A big conspiracy  Smile

Cheers
 
cygnuschicago
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 9:23 am

Quoting Shenzhen (Reply 41):
ts not just what was injected/borrowed/given to Airbus, its what that money would have cost Airbus since then, compounded, if they had pay it back today, which is what the US is asserting in several of the Airbus Programs.

I still don't understand how that comes even close to $200 bn. Any ideas?
If you cannot do the math, your opinion means squat!
 
XT6Wagon
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 2:25 pm

Quoting CygnusChicago (Reply 42):
I still don't understand how that comes even close to $200 bn. Any ideas?

I give you $1billion in 1970, all I ask is that you pay me back the same $1billion adjusted for inflation based on a certain index.

http://www.westegg.com/inflation/

Using this calculator 1 billion would end up being 5.31161 billion. So If you are given 1 billion a year for 30+ years you QUICKLY end up piling up a huge total when adjusted for inflation.

The idea for doing it this way instead of by interest rates and the like, is that it more accurately shows the value at the time the loan/gift occurs. You want to make a bank cry, borrow on a fixed low intrest rate right before massive inflation happens. You borrow $1 million that would buy lets say an entire jet airplane at 5%. Over the next 10 years if you have 15-20% inflation, That $1million + interest is now virtualy meaningless compared to the value it had before that 10 years. So if you look at it from the banks point of view, they gave you $1 million in Year one value, and in total only recieve 1/2 or less of that year one value as the inflation devalues the currency over time.
 
azhobo
Posts: 281
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 2:55 pm

Quoting Moo (Reply 28):
Thank god European governments *did* subsidise Airbus.

Otherwise the world civil aviation market today would be dominated by America and America alone.

And Anet would be a whole lot more boring.

Quoting CygnusChicago (Reply 42):
I still don't understand how that comes even close to $200 bn. Any ideas?

I read where it was compounding interest from way back, as has been alluded to in the thread.

It shouldnt be about the subsidies total cost for airbus, but the cost in lost revenue to Boeing.

I dont think Boeing could care less if the EU spent 100B to prop up Airbus, if A only sold one aircraft. The damages would be the revenue lost to boeing for the one aircraft. At least that is the way I would see it fairly presented.

OF course one could say that every plane sold by Airbus from the beginning of time was a lost sale to Boeing, and that was done through the kindness of the EU heart. But that is over the top as well.

So 200B sounds like a pretty fair figure.

HOBO  Smile
 
NAV20
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 2:56 pm

Quoting EI321 (Thread starter):
Will this ever end? They need to come to some kind of an agreement.

The 'realpolitik' is that Boeing, at any rate, doesn't need to come to an agreement. A long-running case at the WTO, stretching into next year or beyond, suits them fine - since it prevents the EU from giving 'launch aid' to the A350 or any other Airbus ventures; and forces EADS to find a way of raising the cash it needs in the ordinary market-place, at market interest rates etc. Boeing, on the other hand, isn't short of cash.
"Once you have flown, you will walk the earth with your eyes turned skywards.." - Leonardo da Vinci
 
TYCOON
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Fri Jul 27, 2007 4:51 pm

Sorry Sllevin, I have looked it up and did quite alot of research on this when I was a student at MIT. I'll dig up the ressources and I suggest you dig up your library card and head to your local branch to brush up on your facts, my man.
In any event, both companies have received subsidies in various forms - that is the bottom line. For Americans to say that Boeing or MDD never have is just absolute pathetic ignorance of the actual facts (probably the same type of people who believe George Washington chopped down a cherry tree....).
All I can say is thank God Airbus came on the scene and started developing state of the art aircraft that woke Boeing up to start producing equally great aircraft. Everyone has benefitted from this competition: airlines, passengers, people through job creation, and of course us - the airline enthusiasts.
 
airfrnt
Posts: 2002
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Sat Jul 28, 2007 12:33 am

Quoting PM (Reply 26):
But if AirFrnt's three references to Airbus selling no planes or fewer than 10 were all concerned with the period 1967-1973 then I clearly misunderstood. Apololgies.

Not all of them, but it's very safe to say that really until the A320, Airbus was a blackhole in terms of money going in.

Quoting NAV20 (Reply 45):
The 'realpolitik' is that Boeing, at any rate, doesn't need to come to an agreement. A long-running case at the WTO, stretching into next year or beyond, suits them fine - since it prevents the EU from giving 'launch aid' to the A350 or any other Airbus ventures; and forces EADS to find a way of raising the cash it needs in the ordinary market-place, at market interest rates etc. Boeing, on the other hand, isn't short of cash.

 checkmark 

Quoting EI321 (Reply 37):
Im not ignoring ANYTHING. But thats a good way to mask what is a fickle agument to start with. Its well known that as a govt owned company, the formation of airbus was govt funded. That happens with all govt companies, its a no brainer.

What I am asking is that some of the people who are so eager to point the finger to attempt to demonstrate how the govts in question could possibly have given airbus a net payment of anything like $205 billion over the years, before we even consider that launch aid gets [/b]repayed[b] with interest.

What is the difference in percentage terms between the rate at which airbus borrows from the govts in question and the rates at which airbus and boeing borrow from commercial institutions? 1%? 2%? 3%?

Bear in mind, the aid that was provided before the bilateral in most cases was not repayable launch or, or if it was, was vastly below market rates. That restriction came from the bilateral. The vast majority of what Boeing is probably talking about here has to do with the money to keep Airbus and it's components afloat, not launch aid. The 320 was actually able to pay back it's investment (easier since the interest rate was so low) and the 330/340 were under the terms of the bilateral, so Airbus didn't have any choice but to pay that back.

Is the 200bn number bogus? of course it is. It's a Boeing effort to discredit Airbus, just like John Leahy lives to say stupid things about the 787.
 
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moo
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Sat Jul 28, 2007 12:43 am

Quoting AirFrnt (Reply 47):
Not all of them, but it's very safe to say that really until the A320, Airbus was a blackhole in terms of money going in.

It was only really with the A320 that Airbus even started being about selling aircraft - the initial A300 program was purely to ensure that aircraft manufacturing techniques remained available to Europe, and we were not totally reliant on American companies.

The interesting and ironic thing is, if the WTO were to decree that loans and subsidies agreements between Airbus and the governments were null and void and all monies would have to be repaid (and the WTO have done that in a number of cases), Airbus would actually be getting an influx of cash from the governments due to the fact that the A320 loans made a profit for those governments (in thec ase that is center to my mind, the UK government doubled its investment in the late 1990s, and still receive royalty payments to date).
 
cygnuschicago
Posts: 518
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Sat Jul 28, 2007 12:47 am

Quoting XT6Wagon (Reply 43):
Using this calculator 1 billion would end up being 5.31161 billion. So If you are given 1 billion a year for 30+ years you QUICKLY end up piling up a huge total when adjusted for inflation.

Even in your extreme example, 5x30 = 150. Since we're long on speculation, and short on facts, I'm going to try and calculate this tonight, and get some facts.

Quoting NAV20 (Reply 45):
A long-running case at the WTO, stretching into next year or beyond, suits them fine - since it prevents the EU from giving 'launch aid' to the A350 or any other Airbus ventures

Actually no it doesn't. As long as the WTO case is not settled, there is no reason for Airbus to not get RLI for the A350. It's a calculated gamble. Worst case scenario is that the US responds by either slapping on import duties on A350 sales in the US, or banning sale of the aircraft in the US. Since the only customer is US, and it is quite unlikely UA will buy it, Airbus really only have 20 to 30 frames to lose if this happens. Not really a big stick.
If you cannot do the math, your opinion means squat!
 
baroque
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RE: EU Vs U.S. Defense Of Alleged Boeing Subsidies

Sat Jul 28, 2007 11:07 pm

Quoting Moo (Reply 48):
The interesting and ironic thing is, if the WTO were to decree that loans and subsidies agreements between Airbus and the governments were null and void and all monies would have to be repaid (and the WTO have done that in a number of cases), Airbus would actually be getting an influx of cash from the governments due to the fact that the A320 loans made a profit for those governments (in thec ase that is center to my mind, the UK government doubled its investment in the late 1990s, and still receive royalty payments to date).

I had not thought of that option. But you are right, if the loans are made a repayment issue, presumably the Royalties would revert also. And it is not only the 32xs, about 8+ 33xs a month too.

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