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widebody
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:01 pm

Respect to NumberTwelve and KEESJE for posts 97 and 99, the two posts hit the nail on the head from a European perspective as far as I am concerned.

1. The only reason the subsidies issue has been raised by the US at this time is to block any Airbus response to the 7E7. Boeing are aware that they will also lose out by this action, but they are also aware that their subsidies are a lot 'less tracable' than the Airbus ones. Full stop.

2. The notion of subsidies in Europe exists in every aspect of society. The primary aim to develop and sustain employment. The loans/subsidies provided by the EU countries to Airbus are peanuts compared to the life-time cost of sustaining the 50,000 employees on social benefits.

3. The EU system is allowed under the 1992 agreement, the current Boeing system is not.
 
widebodyphotog
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:26 pm

The economy of any country or group of countries is not a zero sum game. Wealth is created and wealth is lost or destroyed, mainly by governments, the pie gets bigger and smaller over time. Just because someone pays lower taxes does not automatically mean that another will have to pay more by any means. I don't pay higher taxes because my neighbors pay less... Arguing about the need to pay for firefighters and police is a rather childish distraction to the larger question, but any appropriation of government funds can be questioned by any citizen because the money the government spends does not belong to the government and the government can not spend without at least the tacit compliance of the citizens...

It is not up to me to prove that Airbus is not paying back loans for their commercial programs. Proving a negative is impossible. Can someone show us how the loans have been paid back and how any future A350 subsidy will be paid back?

Of course Airbus would be foolish to pass up free money from the EU government. My problem with the subsidy is a philosophical one and I have no taste for the details of convoluted legal harrangs that have been posted here. And if the A350 program is such a winner then Airbus should get moving on it and not wait for government assistance. Couldn't they just start up the program and ask for money later? If the A350 program is such a sound investment why does the money have to come from the EU? And if every company who could get government assistance waited on government money to start vital programs the industrial economy would be in pretty terrible shape I would suppose...

By the same token wouldn't Boeing be foolish not to take advantage of tax shelters to protect it's earnings? Like I said before no company has an obligation to fill the coffers of various governments. Boeing has no obligation to make sure that the state of Washington has an arbitrary amount of tax revenue.

I would assert that a corporations greatest responsibility is to protect its earnings. And if it is illegal for Boeing to protect their assets in the way you describe then the gang of federal regulators encamped at Boeing HQ are not doing their job at all.

I don't believe the State of Washington was signitory to the treaty in question and as far as Japan goes, no one forced them to subsidize the companies that will produce 7E7 components and Boeing did not ask them to do it either. Japan did it of their own accord and philosophically I'm against that as well.

How about $2b from the DoD and $600 million from NASA just in 2003 alone for "R&D" that can be applied to any Boeing program at will?

One would think that any funds received by a corporation are "fungible" and all go into the same pot to be spent on whatever, but I think you are missing some details here. I'm sure there are some conditions that apply to Boeing's use of this money. Maybe someone could fill us in on the specifics.

In the big picture what I see is that the A350 is a losing propostion for Airbus from the start. They are too far behind the competition in terms of time and development work and the A350 looks to be a "face saving" effort at best. If the A350 was wholly viable on it's own why put up with delays and debates on whose money is going to pay for the development and production? Why waste any time at all, just get on with it.


-widebodyphotog
If you know what's really going on then you'll know what to do
 
NumberTwelve
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:32 pm

widebodyphotog: "Of course Airbus would be foolish to pass up free money from the EU government..."

lol - now I know why the indebteness of US households is exorbitant high. You ask a bank for loan, they give you some and you think it's free money.
And sorry to kill your dream: even paying with credit card means , it isn't free  Wink/being sarcastic

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scbriml
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:48 pm

I don't believe the State of Washington was signitory to the treaty in question

Using that logic, the individual states of the EU can loan Airbus as much money as they like.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
widebodyphotog
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:51 pm

European Subsidies to Airbus
* Of the eight Airbus aircraft launched since 1990, only three programs have been launched with government investment.
* Airbus pays royalties to governments over the entire life of the aircraft programs. Interest and principal is repaid on deliveries, even before the programs break-even and irrespective of the sale price


Wait a minute something's not right here...

If Airbus pays back their loans, principal and interest, the total payback is much more than the initial investment. So if they could fund these programs with their own money why in the world do they need to ask for government loans that cost them more than using their own money? Why would Airbus pay more over time and take such a risk if they don't have to?

And as far as tax incentives for Boeing, how much tax revenue would the various states get if Boeing did not expand to build 7E7?...Nothing. How does the government entitling itself to a portion of the economic activity Boeing creates help Boeing? It does not. It's that old expanding economic pie thing again. Boeing is making the pie bigger and the government is taking a smaller slice of that pie than they would otherwise. Boeing gets to keep more of what it earns, that is not a subsidy.

-widebodyphotog
If you know what's really going on then you'll know what to do
 
trex8
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 9:54 pm

> They are too far behind the competition in terms of time and development work and the A350 looks to be a "face saving" effort at best. If the A350 was wholly viable on it's own why put up with delays and debates on whose money is going to pay for the development and production?

I must be missing something, Airbus has said several times publicly they don't need that "subsidy" and if its not there for whatever reason, they can still do the program without it , but they will apply for it - as many have said, they would be fools not to if its there- and there is a at least 3 month moratorium on the EU agreeing to any such help due to these latest developments but I haven't heard from anywhere that Airbus is halting development work during that period because of its non availability.
 
widebodyphotog
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 10:04 pm

NumberTwelve,

I was referrring to money that does not have to be paid back as "Free Money". I will ignore the borderline personal insult tone of your post and direct you to reread the entirety of the posting to get the proper context.

-widebodyphotog
If you know what's really going on then you'll know what to do
 
NumberTwelve
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 10:16 pm

Widebodyphotog- you always talking about subsidies etc. And I can't take it as serious as you want me to do. When you loan money, it's not subsidy, you have to pay back - with or without accuring interest.

So when there is no success, the manufacturer needn't pay back anything. Maybe the US politics is little different (but they support airlines and manufacturers too, even if the word "subsidies" is incorrect) but in France, England, Germany, we think it's better to pay money to companies that they stay in business than paying unemployment benefits.
If your government is another opinion, why not? But please don't force us to do the (in our opinion wrong) things as you do. Very simple.

You needn't be moping but when I hear loaning money is free money, I only can laugh!
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NumberTwelve
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 10:38 pm

777er: "Can Airbus actually afford to build a new plane without any funds. Airbus always asking for funds is starting to become a joke."

So when it becomes a joke, why don't you laugh - instead of being annoyed?

PVG: "The sad part is that the US Government doesn't realize the value of having well paying ..."
Greasespot: "Cannot Boeing ask for the same subsidy? Just because the gov't does not give it to them it is not Airbus's fault. "

Totally agree with Greasespot: you expect that when the US Government makes mistakes, the European governments have to make same mistake?

Kabair: "I am by all means against government using taxpayer money to help a business succeed. And this whole thing with Airbus and the EU would tick me off"

So sorry that we can't considerate if something ticks you off.


[Edited 2005-01-14 14:40:04]
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widebody
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 10:43 pm

If Airbus pays back their loans, principal and interest, the total payback is much more than the initial investment. So if they could fund these programs with their own money why in the world do they need to ask for government loans that cost them more than using their own money? Why would Airbus pay more over time and take such a risk if they don't have to?

This statement is high school stuff - ask yourself the same question about any bank loan you take over your life-time. Same as for personal loans, it's about freeing up cash. The example to which you refer - ask yourself why take the risk of losing your own cash when you can lose someone else's cash instead? Such a statement can apply to any number of daily examples, like why take a loan to buy a big car when you can buy a small car without a loan, or why lease when you are ultimately losing the money?

It's not a case of whether Airbus need it or not, it's simply that its available and its legal. If a loan is to be taken, why not excercise the right to loan from goverments at better rates? You financing package will be principally designed to maximise your cash flow.


 
widebodyphotog
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 10:49 pm

NumberTwelve,

I will give you the deference of joining the thread rather late in the discussion...

The US government supports unviable industries just to keep people employed and maintain political constituancies. Those industries suffer from the poorest labor relations, wages, and lack of private capital investment as a result. It's a waste of money to artificially prop up anything that can not make it own way in the market place and historically subsidies only prolong the collapse of industry. Subsidizing industry makes companies lazy and takes away incentive to develop new products and methods. The steel industry in the US is a perfect example of this.

The implication at the beginning of the thread was that Airbus did not have to pay back monies received from the EU. I believe that the issue was settled several posts back that they indeed pay back the loans with interest over the life of the program regardless of success of failure. The thread has moved on and my question is if Airbus can fund programs on its own why do they want capital investment that will cost them more than using their own earnings? No one has yet answered this.

I could care less what government is subsidizing what. I am opposed to subsidies, transfer payments if you will, in general and that it my point. But there is a huge difference between subsidies and keeping more of what you earn. If you don't want to take it seriously then you should give all of your earnings to your government and let them determine how much you should have to live on. If the benevolence of your European governments is so supreme why keep anything for yourself?

-widebodyphotog
If you know what's really going on then you'll know what to do
 
widebodyphotog
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RE: Airbus Seeks $1Billion Launch Aid For A350

Fri Jan 14, 2005 11:14 pm

This statement is high school stuff - ask yourself the same question about any bank loan you take over your life-time. Same as for personal loans, it's about freeing up cash. The example to which you refer - ask yourself why take the risk of losing your own cash when you can lose someone else's cash instead? Such a statement can apply to any number of daily examples, like why take a loan to buy a big car when you can buy a small car without a loan, or why lease when you are ultimately losing the money?

Again I'll ignore the implied insult and respond on the merits of your comment...

The example is not comparable to the situation. Airbus is not choosing between funding a smaller program with their own money or a bigger one with someone elses money. It's the same program with a difference source of capital and it seems to me that using EU funding presents more of a risk in the long term if the program is less successful than envisioned. It also means that their are political constraints and hurdles to be overcome as well. Why go through this if Airbus can fund the project on their own and believe the expenditure is worth it? It's understood that freeing up cash is what Airbus wants to do to some degree, but why using government money? This is where my philosophical divergence comes into play. Why not banks, or venture capitalists, or a plea to the citizens of Europe for donations? Why is the first avenue of outside funding for Airbus the various governments of the EU?

-widebodyphotog
If you know what's really going on then you'll know what to do
 
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scbriml
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 1:47 am

If the benevolence of your European governments is so supreme why keep anything for yourself?

Now you're just being silly. We kind of like the way things work in Europe, you like how it is in the US. What's the problem? Get over it!  Smile

If Airbus can get a loan to partially fund a new project, leaving them more of their own money to invest in other projects, why wouldn't they take it?
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
tsully
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 8:59 am

Scbriml wrote:
Do you mean Riyadh?


Why yes, I do mean Riyadh...I didn't notice until now that the signature field had cut off the last letter. Oh well. Take a look at my profile to read the whole quote.


I love America. I guess that makes me Bush's poodle, but I'd rather be a dog in New York City than a prince in Riyadh.
 
rtfm
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 9:17 am

I am joining this one rather late and let me state for the record that I like both Boeing and Airbus a/c to fly on - BUT when a company forecasts a 10% profit but then says that is needs some of my money (I am a European taxpayer) to launch a new product, I want to scream WHY!!!!??? The company that I work for is not likely to make a 10% margin this year and if we had the gall to ask for government money to support us we would (rightly) be laughed off. I figure that it is time for Airbus to either put up or shut up, 'cos you can't have it both ways.... you are either the foremost global airliner producer or you aint.....
 
trex8
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 10:15 am

>foremost global airliner producer or you aint.....

WTH does that have to do with how they get their R & D budget????

if your company provides as much economic spinoff as making large commercial aircraft usually does, then I'm sure Brussels will be happy to consider giving them some money too - even if you expect to make 30% profit!
 
rtfm
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 10:29 am

Brussels may be happy to give them them some money - but that's MY money!!! it always makes me cringe when people talk so blithely about the money that governments spend... Governments don't have ANY money of their own - it ALL comes from the taxpayer in one shape or form....
 
trex8
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 11:06 am

>it ALL comes from the taxpayer in one shape or form.

totally agree and if they use that for what I deem good purposes, like protecting me from OBL, or educating my kids, or making sure there is a fire service or ambulance when I need one, or providing jobs for people so that I also economically profit from their activity, or even regulating Enron executives, I feel its money well spent.
If they are wasting it on psychological surveys of the dietary habits of marijuana smoking left handed paraplegic lesbian college level educated vegetarian eskimos (not that I personally have anything against anyone like that) then I will have a big problem! But if I live in a democracy there is a way to try to stop them from doing too much of this trash. Its called voting the fools out of office.
 
Leskova
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RE: Airbus Seeks $1Billion Launch Aid For A350

Sat Jan 15, 2005 6:14 pm

BUT when a company forecasts a 10% profit but then says that is needs some of my money (I am a European taxpayer) to launch a new product, I want to scream WHY!!!!???

Now, if you could just point out for all of us where Airbus says it needs the money, that'd be nice - because all I see is that Airbus says it wants the money, and the reason for that is quite obvious: because under the 1992 treaty, they are able to receive it.

If that treaty is now, as most of us around here hope, followed by a new one, Airbus has repeatedly stated that they would do without it.

Until then, quite simply, Airbus is simply using every means available to them - any company headed by executives that are worth their pay would do the same.

Regards,
Frank
Smile - it confuses people!

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