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Is Airbus Subsidized?

Tue Jul 20, 2004 2:50 am

I know, wear my flak vest, but what is censuses on this issue? From what I've seen in these posts. The answer seems to fall along continental lines.
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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 2:53 am

Whatever gave you that idea????

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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 2:56 am

Becasue I would like to see the posts, point blank in one thread; not having to sift through other posts. I did look back and dind't find any recently.
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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 2:59 am

There was one or two a week ago if I recall...something about Boring (Boeing) in it too.

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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 3:53 am

Every European government categorically denies that subsidies exist.

Oh,and the moon is made of green cheese too.

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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 4:03 am

only indirectly - so maybe yes they are subsidized.... Airbus receives government backed loans - which have reduced interest, more favorable repayment period, and a no liability to Airbus and the lenders... etc...

If the A380 project for whatever reason is dropped - their is absolutely no risk for its lenders... so Airbus would never go out of business nor would it be required to restructure in any way... They'll just not pay... and most likely the governments will forgive debts as it would be in the best interest of the respective country and the Airbus employees.

This is all legal and according to trade agreements when Airbus was just baby... But of course, Airbus is now a fierce competitor.. this is reason why Boeing believes these agreements should be restructured so that Airbus is liable to market volatility.
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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 4:11 am

The difference back then was, that Airbus complained about US Defence contracts with Boeing as a form of subsidization. Now they have a problem, however, as they have been going after defence contracts of their own in a big way, such as the A400M and the A330 tanker.

The bottom line is that every business wants every advantage that it can get. But you don't always get the truth.
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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 4:19 am

Directly, Airbus IS NOT subsidized.
In-Directly, Airbus IS subsidized by way of Incentives, Tax credits, Deferrals, Training Credits, etc etc etc from the resident governments.
These are universally accepted tools, but albeit, backdoor tactics used to protect highly coveted, high-paying jobs jobs jobs!
Every country that has a stake in Airbus projects, does whatever it can to maintain, and or increase their share of production, and in the end, keep people working.
The rise of Airbus is not so much the story of one company trying to better another, as much as it is, one country trying to better another, this competition resulting in superior products and systems.
For all the unity that the EU tries to breed, it will be a very long time before nationalism ever goes away.

Does Boeing receive subsidies? When compared against this model, You betcha!

The argument that Airbus has an unfair advantage due to subsidies is garbage.


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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 4:23 am

This is the grayest of the gray areas. And an area of which I know very little, so everything I will say is something I've heard from somone else.

Is Airbus subsidized? Short answer- sort of
Is Boeing subsidized? Short answer- sort of

The days of direct subsidies are over (well mostly) but that doesn't mean some questionable deals have been cut. No doubt, Airbus in their early days were subsidized. A case could be made that Airbus didn't pay a cent of the A300, A310, A320, and A330/A340 development. I don't buy that completly, but I don't doubt large chunks of the Airbus product line were subsidized. A bilateral agreement signed in 1992 prevents a manufacture from recieving subsidies that total more than 30% of the total development cost. Since all but the A380 were built before this development, they'res no telling how much other products were subsidized. And of note, several major A380 loans do not have to be repaid if the aircraft does not turn a profit for Airbus. How convienient.

Then there is Boeing, not exactly clean either. Boeing has one of the largest military/space divisions in the world, if not the largest. Huge DoD contracts mean big bucks for Boeing, as Boeing Integrated Defense Systems now makes more profit that Boeing Commercial Aircraft Division. The profit from defense products is (rumored) to be funneled back to BCA to fund new commercial products.

Direct subsidy- no, indirect subsidy- maybe. I have a problem calling this a subsidy because Boeing is making a profit off a service they provide. They sell an F-18 and no one can say Boeing doesn't have the right to spend their profit how ever they like. Boeing does not plead with the Pentagon for money to build a new commercial aircraft. But, sometimes military contracts appear more expensive than they should, like the KC-767 contract. This is where the subsidy cry comes in. Instead of directly subsidizing Boeing, the theory is the DoD pays twice what a product is worth instead.

My problem with this theory- Boeing, until very recently, had one of the smallest military divisions in the U.S. It wasn't until Boeing went on a buying spree in the 90s and gobbled up Rockwall, McDonnel Douglas, and others that Boeing had a sizeable military sector. Boeing's only two big military contracts from 1950-1990 were the B-52 and KC-135. Yes these were huge, but compare that to MdD's, Lockheeds, and Rockwall's contracts... rather miniscule in the grand scheme of things. And since Boeing aquired it's military divison, it has only begun one major project- the 7E7. And now Boeing is saying it would be willing to disclose it's finances if Airbus did so in kind, so I'm inclined to think Boeing is keeping the 7E7 clean as well.

The 707, 727, 737, 747, 757, 767, and 777 were all developed out of Boeing's pocket, but revenue from military contracts no doubt helped fill Boeing's pocket.
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RE: Is Airbus Subsidized?

Tue Jul 20, 2004 6:28 am

Boeing's profits from military projects are the result of successful bids against other defense contractors. One can easily state, of course, that the traditionally larger US defense spending helped to ensure that there was a much larger pie from which to get a slice. So to speak.

Nonetheless, Boeing has not received grants or loan guarantees (which are, absolutely, huge grants in their own right, as the cost of capital is profoundly lower and otherwise-unavailable capital is found) on any scale such as those enjoyed by Airbus.

Still uncertain as to whether I genuinely believe all that is so evil; if it ispoliticaly expedient for European governments to fund EADS as a huge high-tech jobs program, well, that's their prerogative. From where I sit, it looks like pretty good policy, and a lot of the complaining, like sour grapes.

Still a lot to think about. And I am too tired to think.
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