What’s next in WTO case

Update, July 2: The Russians are coming, the Russians are coming. This Defense News article details plans by a US company to offer a Russian airplane in the KC-X competition.

Photo from Defense News

Talk about a foreign, subsidized airplane….

Original Post:

Here is a good Reuters report about what’s next in the Airbus WTO report.

The EU complaint against Boeing is still in WTO hands; the Interim Report is due July 16. There will be a new round of spin machines.

As far as we’re concerned, there is a pox on both houses…..

EADS statement on WTO affect on KC-X competition

From Guy Hicks, VP of corporate communications at EADS North America:

“The Obama Administration and Department of Defense have opposed every attempt to use the ongoing WTO commercial trade dispute to derail the KC-X competition.  The only beneficiary of such a noncompetitive action would be the Boeing Company.  Everyone else—the warfighter, the taxpayer and 48,000 Americans who stand ready to build the KC-45—would lose. Continue reading

Boeing responds to the public release of the WTO ruling

Boeing has issued the following statement:

Boeing Calls WTO Ruling a Landmark Decision and Sweeping Legal Victory
– Launch aid for every Airbus program deemed illegal and damaging
– ‘Prohibited’ A380 launch aid must be withdrawn ‘without delay’
– Legal principle set: airplane programs must be funded on commercial terms
– Government funding of Airbus infrastructure and R&D programs also ruled illegal
– More information, including excerpts from the decision, will be available later today at http://www.boeing.com/wto
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Airbus responds to WTO public release of final subsidies report

The 1,038 page Final Report by a three-member panel of the World Trade Organization on the US complaint about illegal subsidies to Airbus was made public today.

Findings and Conclusions: 5 pages, PDF. These are difficult to grasp when taken in isolation of reading the entire report, which at this posting we’ve not done.

Home Page to the Report in segments and the entirety.

The Interim Report was issued in September and the Final Report in March, but these were supposed to be confidential. Riddled with leaks to Airbus and Boeing partisans and promoted in the press as wins and losses by both sides, the public report is the first opportunity to read it for one’s self and draw conclusions.

At 1,038 pages this is going to take a while.

In a pre-release, embargoed press briefing, Airbus and its parent EADS said the appeals by the US and European Union are expected on points each side believes were in error.

Airbus made the point that this panel report has not been adopted by the WTO as fact and therefore any claims by Boeing that this is the final, and actionable, conclusion is misleading. The panel report may be appealed (and will be), after which the WTO appeals panel must decide on these appeals. After this process is done, the WTO itself must accept or reject the report.

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“More has been costing more”

With the Pentagon’s announcement this week that a major push has begun to wring costs out of the defense budget, will this macro approach trickle down to one of the largest defense procurements in decades–the KC-X tanker recapitalization?

Remember when Defense awarded Northrop Grumman the KC-X contract in 2008? A key, if not the key, to winning was, “More, more, more.”

Now Ashton Carter, the top procurer in DOD, says “more has been costing more.”

Given one advantage Boeing has over EADS in the current KC-X competition–life cycle and MilCon costs–will “more, more, more” cost EADS the contract?

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787 grounding not “safety-of-flight” issue

The temporary grounding of the Boeing 787 flight test airplanes to deal with the latest assembly issues is not a safety-of-flight issue and was not sought by the flight test crews, says Scott Fancher, program manager.

The Seattle Times reported the cessation of flight tests yesterday. Boeing disputes the term “grounded” and says the flights are discontinued until inspections and repairs are completed.

In a telephone press conference this morning, Fancher says the problem with shims and fasteners in the horizontal tails assembled by Italy’s Alenia stem from improper gaps surrounding the shims and too much torque on the fasteners.

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Weak Euro helps Airbus vs. Boeing

The weak Euro at its present level could help Airbus lower the cost (mostly in Euros) and therefore the price (entirely in dollars) by as much as 10%, according to Charles Armitage, an aerospace consultant based in London.

Check out this story in Aviation Week.

This is bad news for Boeing generally and for the KC-X competition specifically. This could put pressure on Boeing Commercial Airplane prices.