Government subsidies for healthy companies

Two news items caught our eye this morning.

The first was the financial reporting for EADS today. Although EADS reported a small loss on foreign exchange and financing costs, the company increased its cash position. This came under criticism in Germany for the bailout of the A400M program.

At the time (and today) we didn’t have any particular issue with that contract being renegotiated. It was a poor contract in the first place and government meddling over the engine selection might arguably be considered at the root of the program delays. But the increasing cash position does beg the question why Airbus plans to tap government launch aid for the A350.

Although the WTO did not find launch aid, per se, illegal (just how it was implemented), we don’t believe a healthy company needs government money, period.

Which brings us to the second story that caught our eye. It seems there is a bit of a renewed controversy in South Carolina over this state’s issuance of $250m in bonds for the Boeing 787 production facility.

The irony of Boeing’s complaints over government aid to Airbus, of course, is that while the fight at the WTO was reaching its peak, Boeing sought and received nearly $1bn in government aid from South Carolina and local jurisdictions for the second 787 assembly line, according to press reports at the time.

39 Comments on “Government subsidies for healthy companies

  1. I disagree with you, Scott, over renegotiating the A-400M contract. The ‘original’ contract was just fine with both the A-400M customers and EADS.

    The fact the French then ‘took over’ (more like hyjacked it) the program is where it began to fall apart. It was France that demanded the European built engine, not Germany, who was at the time the biggest A-400M customer. EADS had selected the PW Canada engine, but the French objected, thus throwing to whole program into years of delays and cost overruns. All this time Germany, UK, Spain, and all the other customers sat on their hands and on the sidelines. No one wanted to challenge France. Only South Africa had the guts to back out of the program, and they are still waiting for their deposits back. France, now, essentially ‘runs’ both EADS and the EU today. Germany wanted more features and mission capabilities, like low level TFR flying , etc. and was willing to pay extra for these extra features. Almost all the customers wanted an air refueling tanker and receiver capability.

    Well, as it turns out, the A-400M will begin its operational life as nothing more than a fatter C-130 trash hauler version. Its tanker capability will be delayed and its TFR capability will not happen at all. Even the promised cargo and range capability is down from the original specs. The A-400M is no longer a 37 tonne capabile airplane, it is 7 tonnes overweight, and now is a 30 tonne airplane. Its range at max payload is also cut by as much as 25% on some missions.

    It seems that dispite getting overwelmingly defeated on the military battlefields of both WWI and WWII, France has finally defeated Germany. EADS will build a far less capable airplane for 30% more money, or even more than that. It seems EADS is still allowed up to 30% more in cost overruns (based on the new contract money, not the old one). EADS boldly stood up to Germany some 18 months ago and said they were tearing up the original contract, and through down the higher unemployment card on the table, essentially saying to its customers, and owners, we will buld the airplane we want to build and you will buy it at the price we tell you to. If not we will put XXXXX number of people out of work.

    France completely backed up EADS management.

    About a year ago, it was France’s President Sarkosi, not EADS or Germany, essentially telling President Obama he had to buy the A-330MRTT (the former KC-45A) for the KC-X program. We are very fortunate he did not back down and Boeing’s KC-767AT (now called the KC-46A) was selected a few months ago.

    So increasing EADS’s ‘cash flow’ even on a year where they posted a ‘loss’ is all just fuzzy math. It is kind of like the US unemployment numbers where 400,000 Americans lost their job last month, yet the unemployment rate (percentage) remains the same.

    Look for the EU (France) and EADS to try to make some headlines over the $1B ‘benefit’ Boeing gained from building their second B-787 line in South Carolina. But that is way different from the billions of Euros EADS will get in ‘government launch-aid’ for the A-350.

    • Small history point, Top Boom. France was the main “winner” of World War I, if you get real winners in wars where millions are killed. It was defeated in World War II as was a whole raft of other countries including Poland and initially Britain. More relevant to this blog, Germany signed up to the bailout of the A400M because they decided it was in their interest to do so. They just like complaining.

    • Actually, the PW Canada “option” for the A400M was never viable due to ITAR restrictions. The method of control with ITAR in the US when it comes to defense related technologies, is in practice to ensure no transfer of technology by any means, whereas in the EU where the A400M is largely based, the transfer is licensed and controlled while exports of the product is normally allowed.

      As has been pointed out several times in earlier threads, the A400M’s market strategy for EADS is to sell the A400M to any foreign government that they are allowed to. If ITAR restricted hardware and software was on board, EADS would effectively only be allowed to sell within the US, and even sales within Europe would be problematic. This would restrict the market to a point where the business strategy would fail (Yes, there was a business strategy for the A400M when the programme was launched). So, as things currently stand, the A400M must be ITAR free; like many other European defense products. As a side note, European commercial space products are by and large ITAR free.

      The A-400M is no longer a 37 tonne capabile airplane, it is 7 tonnes overweight, and now is a 30 tonne airplane. Its range at max payload is also cut by as much as 25% on some missions.

      Well, in the payload/range elbow chart approved for public release on September 21, 2010 (i), the A400M can fly 1780 nm with a max payload of 81400 lbs (37 tonnes). In fact, that payload/range elbow chart looks immaculately similar to one from 2006 (ii).

      (i) http://www.ndtahq.com/documents/FutureAirTechEADS.pdf

      (ii) http://www.leeham.net/filelib/EADS_A400M.pdf

      I’d guess that Airbus Military has slightly increased the MTOW of the vehicle and combined with both a better than expected aerodynamic performance as well as a better than expected propulsive performance of the TP400-D6 turboprop engines, the increase in OEW will not have much of an impact on the projected payload/range from the originally advertised specs.

    • Oh my God, you are so wrong about so many things [edited]. Now.. where to start?

      About low level flight for Germany: It is not cancelled. The A400m (no dash in Airbus’ program names) will have several standards as has almost every military jet. The first standard will be a transport aircraft and nothing more. That is normal, because that is what the customers now lack: transport capabilities. They all agreed that it was in their best interest to have a limited aircraft that could perform what was really necessary NOW, and upgrade it later. Since the upgrades are mainly related to the FMS, they will be easy to put in place.

      The refueling capability will come later too. No worry !

      Beyond that, the A400m has proven to meet the performance (takeoff, cruise, etc.) and in some cases, do better than expected.

      I find that really interesting that you point out costs overrun, since, in military programs, the DoD has exceptionnal records… F-22, F-35, C-17, B-2, B-1… Actually, the only program that comes to mind and that is on time and on budget, is the Lakota helicopter. But wait… That’s and EADS product ! Funny how things do turn out sometime.

      Funny too that you talk about EADS management. Airbus CEO is German, and is next in line to be the EADS CEO after Gallois’ retirement. The next in line for Airbus CEO position is also German. But yeah, France has the power, right…

      Now, I don’t deny that there are some tensions between France and Germany in both EADS and Airbus, but despite that, in 40 years, a company managed to come toe to toe with Boeing. See what happened to the others? Lockheed? Out of commercial aircraft business. McDD ? Eaten by Boeing.

      Pulling WWI and WWII arguments is out of line. That was a whole other context and it is quite frankly a blow aimed bellow the belt. You don’t see French people bring the role of France in the Independance war or the Purchase of Lousiana everytime they have an argument with American people.

      Speaking about your fortune with the KC-46A, I really hope for US Airmen that they get what Boeing promised. I think I’ll hold you to your comments if Boeing delivers anything less than that.

      “Government launch-aids” were part of a bargain between US, EU, Boeing and Airbus in 1992. All agreed that they were legal. Now WTO decided they were legal. Whereas tax deductions, and research programs are not. What did we read, not two weeks after the WTO rulling ? Nasa granting Boeing with a few millions of dollars to do research on next gen pax transportation aircraft. How would you call that? Fair? Unfair? Because I do not see the ONERA or the DLR paying Airbus for the research on the A30X! Actually, that’s the other way around!

      By the way, do you know how Gov launch aids work? For every airplane sold, governments get some money back, even after the launch aid is repaid. That is pretty fair for the states and taxpayers, don’t you agree? Whereas tax deductions…. Well that doesn’t seem fair to me !

      Lastly, France president’s name is spelled Sarkozy.

    • Despite the A400M during the first years mostly being advertised by EADS as a mainly military aircraft, this didn’t prove to be a very successful PR strategy. To me it was clear from the beginning that most of the A400M partner states (and most other potential buyers like for example large NGO’s) didn’t want a full blown high-gear combat-proof aircraft. Most of them were looking for a reliable high-capacity disaster-relief, repatriation, rescue and humanitarian ‘food-bomber’ aircraft with an additional capability to also safely operate in war-torn conflict regions.
      Even governmental organizations like the idea that an A400M cockpit is very similar to that one of any A320 or A330 aircraft. They know, if necessary they will easily find a civilian pilot with Airbus experience, who after crash course of only a handful of flight hours can safely operate the aircraft.

  2. “Although the WTO did not find launch aid, per se, illegal (just how it was implemented), we don’t believe a healthy company needs government money, period.”

    You keep forgetting to remind that these government have shares in EADS. Therefore why EADS would not tap its shareholders for financing if that funding
    is a legal? That’s business 101!

    Now Boeing could consider selling shares to the US government and do the same! 🙂

  3. ‘KC135TopBoom’ will never cease to amaze me. So much crass ignorance about simple history facts and factual errors about A400M, I dunno where to start to correct him. He’s always promptly jumping on his keyboard to write an anti-Airbus, anti-EU and now anti-France prose. His comments are dangerously degrading Scott’s excellent quality blog.
    He should also stop appending dashes on Airbus aircraft names.

    • Disinto: This is stepping over the line on personalizing comments. Consider yourself warned. See our Comments for Readers guidelines.

  4. Thanks for the correction, FF, on WWI.

    Meanwhile my friend OV-099 says; “Well, in the payload/range elbow chart approved for public release on September 21, 2010 (i), the A400M can fly 1780 nm with a max payload of 81400 lbs (37 tonnes). In fact, that payload/range elbow chart looks immaculately similar to one from 2006 (ii).

    (i) http://www.ndtahq.com/documents/FutureAirTechEADS.pdf

    (ii) http://www.leeham.net/filelib/EADS_A400M.pdf

    I’d guess that Airbus Military has slightly increased the MTOW of the vehicle and combined with both a better than expected aerodynamic performance as well as a better than expected propulsive performance of the TP400-D6 turboprop engines, the increase in OEW will not have much of an impact on the projected payload/range from the originally advertised specs.

    I find it facinating how some people will believe every woird EADS says (like in thoise two pdf.files), yet question every letter in every word from Boeing.

    It is not me who pout out the facts the A-400M cannot do what it promised to do on range, payload, or capability. It was not me who started the rumors the A-400M is some 7 tonnes overweight.

    Both of those came out of the French Senate and the UK MOD.

    Now I know the French Senate and the British MOD are a little closer to the EADS A-400M program than I am, and they now know more of what that new airplane will do. Maybe there are some here on this blog who absolutly know the actual customers of the A-400M are just wrong in the info they put out.

    CBL :“Although the WTO did not find launch aid, per se, illegal (just how it was implemented), we don’t believe a healthy company needs government money, period.”
    You keep forgetting to remind that these government have shares in EADS. Therefore why EADS would not tap its shareholders for financing if that fundingis a legal? That’s business 101!
    Now Boeing could consider selling shares to the US government and do the same!

    You do know that EADS is trying to sqeeze money out of the UK Government for A-350 launch aid, don’t you? IIRC, and please correct me if I am wrong, but the UK Government is not a “share holder” of EADS. Neither is Spain, Italy, or Austria, all of which EADS has gone to asking for “launch aid” (and with the threat that if a country does not volunteerily ‘contribute’ unemployment in that country will increase). France has already “contributed’, Germany has not. France and Germany are part ‘owners’ of the company.

    I am a Boeing shareholder (not a very big one, but I do well with them), yet Boeing did not ask me to ‘contribute’ to the launch of the B-747-8F/I, B-787, or the (possible) reengine B-737NG, 7X7, or the initial design work on the KC-46.

    • The French Senate received the report (you’re talking about) on the status of the A400M programme in February 2009. A400M first flight occurred on the 11th of December of that year. So, with about 9 months of flight testing under its belt (September 2010), wouldn’t you agree that Airbus Military at that time would, in all likelihood, have started to not only get a pretty good grip on the capabilities of the aircraft, but that they also could publicly guarantee, with some confidence based on the already undertaken flight testing, that the A400M will be able to carry 37 metric tonnes on a 1780 nm mission as well?

      http://www.flightglobal.com/articles/2010/07/20/344764/farnborough-airbus-to-start-ground-debris-tanker-work-with.html

  5. Disinto :‘KC135TopBoom’ will never cease to amaze me. So much crass ignorance about simple history facts and factual errors about A400M, I dunno where to start to correct him. He’s always promptly jumping on his keyboard to write an anti-Airbus, anti-EU and now anti-France prose. His comments are dangerously degrading Scott’s excellent quality blog.He should also stop appending dashes on Airbus aircraft names.

    Then I invite you to educate me on the capabilities of the A-400M, without using some PR pdf. from EADS.

    Yes, I am anti-Airbus, I have flown on lots of them and think they are put together like trash cans. I am not so anti-EU or anti-France (although I do say it took the US to bail France out twice in the last century but France [old France before the French Revolution] did help the US back when we were trying to come out from under the British thumb) as you may think, but I am very pro-US, I bleed red, white and blue. I don’t believe in “globalization”, that will only lead to trouble because everyone wants to be incharge when only one can. That is what France is doing in the EU.

    Nationalism has worked for well, over 5,000 years now, since before the Egyptions. If it ain’t broke, don’t fix it. So, I don’t believe in the EU, or its concept. It will fall apart one day. My hope is that divorce will be peaceful and not cause yet another European War (you have had so many I lost track).

    For what it is worth, I am also deeply against the “North American Union” or NAU, so much wanted by the liberals and politically inept in the US and Canada, and of course the drug lords and streetgangs in Mexico. But that subject is way off the track for this blog.

    You say you don’t know where to correct me, then I suggest you start reading a history book, then look up the infancy of (then) Airbus SAS, as well as Boeing. Wikipedia doesn’t count, neither does EADS, or Boeing.

    I am not here to degrade this, or any other blog. But I am not going to sit here and read posts filled with anti-US or anti-Boeing crap and let them go unchallenged.

    Before you ‘dismiss’ me as some cooky kid who likes to play with toy airplanes, let me tell you I have over 40 years in professional aviation, including flying on a Boeing in SAC for 22 years, and the rest in airport management at a major US Airport. I also have been to the NTSB and USAF schools on accident investigations and was a military accident investigator.

    Even though I am now fully retired, I still keep up with the industry I grew up in.

    My comments are not dangerous, they are defensive.

    One final note. As I said I was brought up in the USAF who puts the dash (-) in between the Mission, or OEM designignation (A or B) and the series (the number). So in my book, it is A-400M, A-380, B-707, or B-747, just as much as KC-135, F-15, or B-52. I also write the date as day, month, and year (the European style, but the US Military uses that format too) and use a 24 hour clock time.

    I do apoligize for going off track in this response.

    • KC135TopBoom, don’t apologize. In comparison with our pro European-pro Airbus minded friend in this column you’re doing just fine. You may be a little loose with the facts at times but at least you tend to have an honest opinion!

  6. Some people are obviously out of control and are not positively contributing to this blog.

    That is a shame.

  7. OK, People, Lissen Up!

    Dial back the rhetoric and stick to the issues. We’re around on Saturday and are coming very close to closing Comments again. Straighten up.

  8. It should really be up to those people who make the claim to support it. It was claimed that the A400M can only carry 30t, instead of the advertised 37t. It is up to the person who made that claim to support it with evidence, not to sit back and dismiss evidence that dismisses the claim. The logic behind the claim is brroken, so evidence should be provided. An OEW increase does not translate directly into a payload decrease. Witness what happened on the A380, B-787, and I believe on the B-748. Manufacturers simply increase MTOW to get the payload back. In some cases this has other negative implications regarding range specs, in others it does not, because other parts of the airplane system overperform compared to design.

    So where please is the evidence that the A400M lost 7t, I.e. Over 20 per cent of its payload capability?

  9. So, at the beginning, Scott was talking about government subsidies, with some examples about the A400M, the A350 and the 787. He was not talking about the A400M capabilities. He was talking about some germans who criticize the A400M bailout since EADS is in very good health.
    So we should talk about SUBSIDIES, about military programs (like the F35 financial disaster for example, and this one costs much more than 2 billion euros to the taxpayer as the A400M does).
    Not about the so-called french leadership in EADS. By the way, the Airbus boss is german and the A400M program is lead by the spanish.
    Here is my personal opinion about subsidies : Airbus gets loans from european governments and gives royalties to them. Boeing gets genuine subsidies to build its airplanes in an american State instead of another. It’s not the same thing at all.

  10. I don’t understand the American “Angst” concerning the A400M. With some chance this is a low cost option to upgrade parts of the transport fleet (older C130J) with a very capable aircraft at low cost. A “C-400” would of course have some American content and local final assembly, plus offsets (like France buying the F-35). The C-130 concept is not really up to date any more (due to lack of volume), and developing another tactical transport is just waste of money. In the end, USA and Europe should increase cooperation in the defense sector in order to remain competitive versus emerging countries.

  11. I understand that Scott does not like government aid in any way, shape or form. But I don’t see it as the big sin he makes it out to be. The past 3 years alone, there have been massive government handouts to banks and automobile manufacturers in order to “rescue” them from the fallout of a catastophic, artificially created (through carelesseness, recklessness and/or all out arrogance?). In contrast to this, the whole WTO case to me, is a grand theatrical comedy.

    Just for arguments sake, what if the governments providing launch aid called the cash they provide an investment, instead of a loan? If the program goes well, their is great return (in the case of the A320 & A330) and if not, you take a hit (e.g. A340-500/600). For a government, such “investments” reap other rewards besides mere cash returns. We all know that, even if we do not want to admit it. If the opposite were true, there would be no government making such “investments”.

    Its all really pretty straightforward.

    The catch, of course, is Boeing & Airbus fears of what is coming from China and Russia, both who have much more money on hand then their respective governments.

    • Calling government provided launch aid ‘investments’ is in the same boat as calling taxes ‘contributions’. They are both just political stunts designed to fool the people into thinking they are for the overall health of the economy.

      They are not, and fortunately most of the people are not fooled.

      Governments, including the US, are not in business to serve as an economic net for any company. Governments are in the business of protecting the country and its citizens, period. The free markets, as long as governments do not intervine, will assure the investments are there to launch new products. A government “launch aid” (in the case of EADS), or a “bailout” (in the case of GM, Chrysler, and the banks), only assures an artificial reduction in unemployment and support for the economy.

      In the case of the US “bailout” to prevent GM and Chrysler from failing, it was only done to protect UNION jobs. The US “allowed” many non-union companies to fail at the same time they bailed-out GM and Chrysler. Collectively these companies that did fail, put more people on the unemployment line than GM and Chrysler combined would have. But it was said, by the government, “GM and Chrysler are to big to be allowed to fail”.

      Giving EADS money to launch their next airplane, by the various EU governments, is done only to help keep EADS plants in those countries. EADS uses the threat of pulling out of that country if “launch aid” is not provided, and they use it with a very heavy hand. Just ask the UK how many times has EADS threatened to close the wing assembly plant in the UK, or other plants around the UK. EADS has even said they may not need RR engines on the new airplane (it is to late to say that with the A-350). Those types of threats are also given to Germany, France, Spain, and other EU states that have even small EADS plants, or companies that provide parts to EADS. To its owner countries (Germany and France), EADS has become the rebellious teenager to its parents. It knows everything and they are to stupid to know that.

      Imagine the outcry in the EU if Boeing did such practices?

  12. Heeere’s the windup aannnd……WHAM!! he blasts it out of the stadium!!

    • Certainly no lack of imagination.

      Notice that the core difference is observed:

      Europe aids industry to gain capability and return profit
      while the US government sinks money into barely holding up
      an antiquated status quo.
      Europe has a similar festering wound in form of the
      agricultural subsidies that tend to only prop up
      historic but futureless endevours another couple of years.

      The thing to do is sink money into _change_ , take up risk
      but also go for a possibly balancing profit.
      The sovereign ( via the government ) has vested interest in
      where and how developement is nurtured.
      Contrast that to the no interference market ideologies that
      see the state ( and thus the sovereign population ) as mere
      sweepers and/or menders of broken shards.

      ( Just to stay with my alleged persona of transatlantic bashing;-)

      G!
      uwe

  13. Uwe, I somewhat agree with you, almost. But there is no reason for the governments, any government, to be in the free

    • “…, to be in the free”

      could you re_express that please? ( Few in between, but I don’t get your meaning
      in this case )

      G! uwe

  14. Sorry, that should have read “to be in the free markets”.

    • OK. understood.
      ..
      This happens to be wrong 😉

      The state as representative of the sovereign ( i.e. the general population )
      has major interest in any market.
      To cite Jerry Pournelle: an unchecked “free market” is a fourtnight away
      from trading human flesh, organs and kids. Everything else will be available
      on even shorter notice.
      ( and why does the US then not keep their hands out of drug trading? )

      So my position is: anything beyond a sandbox controlled “free market”
      is destructive and thus unacceptable in the long run.

      Lack of (hydrocarbon) refining capability in the US is another showcase
      of free market carcinogenic rot.

      G!
      uwe

      • It seems Mr. Pournelle has a very active imagination. Where (in free markets) does the slave trade exsist? It does exsist in nations without a free trade system.

        The problem actually is, and it doesn’t matter if the trade is airplanes, slaves, or widgets, governments like to stick their little fingers into the pie. Thus the defination of a free market varies from country to country.

        The WTO, EU, and US various definations of ‘launch aid’ is a great example. Until one agreed defination of what ‘launch aid’ is, and by extension what ‘free market trade’ is, we will never have a solution.

        To prove that, I site the various definations and spin that each side (EU, EADS, US, Boeing) puts on how they read the WTO ruling for or against Boeing and EADS.

  15. KC135TopBoom :
    It seems Mr. Pournelle has a very active imagination. Where (in free markets) does the slave trade exsist? It does exsist in nations without a free trade system.

    Being able to trade slaves ( and other forbidden or regulated items ) is a sign
    of uncontrolled market forces at work.

    The market you describe as “free” is a regulated market.
    The discussion is about how and where to regulate.
    My point is that carefully creating targeted demand and/or supply is a
    Good Thing (TM). A perfect example is the current regime of providing
    advantage to regenerative energy sources or fuel efficient cars here.

  16. “To prove that, I site the various definations and spin that each side (EU, EADS, US, Boeing) puts on how they read the WTO ruling for or against Boeing and EADS.”

    Amen to that!!!

  17. The WTO appeal on the US case against EU/EADS has just been released. They dismissed previous claims of “prohibited subsidies” (tied to export performance). They also declassified a number of the “actionable subsidies” (subsidies that cause harm). The ruling against EU/EADS partially stands, but it’s now very vague:

    … with respect to the actionable subsidies that have been found to cause adverse effects to the interests of the United States, the Panel’s recommendation that the European Union “take appropriate steps to remove the adverse effects or … withdraw the subsidy” stands … the panel declined to make any suggestions concerning steps that might be taken to implement its recommendations.

    Plaintiffs are prohibited from retaliatory action against actionable (as opposed to prohibited) subsidies.

    The usual suspects have of course come out to claim victory for their respective positions.

    The most sensible statement is the Appellate Body’s final clause, 1418: The Appellate Body recommends that the DSB request the European Union to bring its measures, found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the SCM Agreement, into conformity with its obligations under that Agreement.

  18. So the WTO took the “middle of the road” in their ruling against (for) Airbus, how “unexpected”…..

    I suspect when the WTO Appeals Board rules on the case against Boeing, they will make that same “middle of the road” decision…….

    • Well,
      The WTO intially accepted a (significantly) reduced set
      of items from the US allegations brought forward.
      The now released appeal triggered review cut further
      into the limited set of initially upheld allegations.

      It would be interesting to know what Boeing expects as
      “complying action” from this ruling.

      Mentioning explicitly the A300/310 financing is imho a
      red herring as trying to include items from pre1992 had
      already been rejected by the WTO earlier on ( afair ).

    • Middle of the road? Maybe. I find the WTO reasoning slightly strange, but interestingly pertinent to Leeham’s original comment. They don’t have an issue with launch aid per se, which is Boeing’s contention. But they do think Boeing was disadvantaged by the subsidies that Airbus received, of whatever form. That’s because Airbus was only able to produce the models it did due to its subsidies. This meant that Boeing faced competition that it wouldn’t otherwise have done. And competition is bad from Boeing’s point of view.

      Now you might think that competition is a good thing in general. Following the logic through – if Bomabardier, Comac, Embraer and so on get subsidies that will create more competition. Good for airlines but bad for the incumbent manufacturers. And of course, now Airbus is now in the incumbents along with Boeing.

  19. – The A400M will be a 30t freighter
    – EADS should have bought the superior PW engine
    – The A400M costs as much as a C-17
    – Everyone that says Boeing is massively subsidized just doesn’t understand
    – In case the discussion goes wrong lets pour in a war 70 yrs ago

    incapable of change

  20. The problem is the shotgun method of bringing cases to the WTO. If the US had brougth a case specifically about each individual issue, they could get a clear Guilty (or Not Guilty, as the case may be) verdict and then one would not have all of this political grandstanding from both sides.

    Biggest major point (actually question) in my opinion is, what will this ruling actually change? Based on the EU/Airbus reaction, it does not seem like much. Hence, much time, money and ado about nothing!

    I see a response from the EU which makes minor changes to the offending practices, gives them new names and hopes that will satisfy the WTO.

    The US will, in all probability, launch a new protest, or an appeal, whatever the appropriate mechanism is, and then we will see if the new coat of paint holds.

    And so on, and on, and on…………

    keesje, you neglected to bring up the other war that had been mentioned, which started, for most, almost 97 years ago. For others, it will be 94.

    • The missconception pushed is that Airbus succeeded due to a subsidised product.
      i.e. Boeings superior products were undercut by cheap trash from Europe.

      In the Real World (TM) Airbus ( i.e. the consolidated Euro Aerospace Industry)
      was able to _(re)enter_ the market helped aside from a lot of other things by
      RLI. But due to the pay back nature of RLI market success is linked to a
      superior product that leverages technical innovations ( and maybe a more productive workforce and/or a more efficient production environment).

      Boeing certainly would have liked to stay with the historically aquired
      US market dominance after WWII. Notice that this was not from technical
      dominance but partly on borrowed minds and knowledge and certainly on a
      much more aggressive interaction with market participants.

    • Actually, Uwe, the WTO’s main conclusion is precisely that Airbus did succeed due to its subsidized product. Without the subsidies, Airbus wouldn’t have competed as effectively against Boeing as it did.

      Boeing’s aim was to get the WTO to rule against launch aid specifically, which the WTO declined to do. This hasn’t stopped Boeing from declaring victory and claiming that launch aid was found to be illegal. I assume they would prefer the WTO to come out with a clear judgement, but they have to make the best of the situation.

      The question is what happens next. Boeing doesn’t seem to be in a mood to go back to the bilateral agreement, but there’s not much more they can do with the WTO. It looks like stalemate. Airbus will presumably have to make some process changes in their funding arrangements, but no more than what Boeing would have to do on its subsidies.

      • I didn’t deny that.
        Gov. push fixed the high entry hurdle.
        But without a very good product that would have been worthless.
        RLI reclaims profits on sucessfull investments for another round.

        I see no reason why gov. money should provide for private profits ( as in taxgifts ).
        Perfect example on how not to do it is
        “Deutsche Bahn”. Shares were intended to be sold under the assumption that state subsidy would add to expectable profits and thus share dividends.

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