Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
777 decision may come before 737: JP Morgan
EADS submits tanker bid; Boeing to follow
Update, 2:30 PM:
- Here are three PDF slides of information from the press conference, comparing the KC-45 with the KC-767 NewGen: KC-45 slides 7-08-10.
- Boeing does not plan a press conference with its tanker submission tomorrow-just a press release and a note on its Tanker Blog. We will create a separate posting for this information tomorrow.
- Addison Schonland has an 11-minute podcast with Airbus Americas Chairman Allan McArtor.
Original Post:
EADS will submit its bid today for the KC-X tanker competition. Boeing’s bid will be filed tomorrow, when they are due.
(Detour:) This just moved from Bloomberg: The release of the WTO’s Interim Report on the EU complaint about “illegal” subsidies to Boeing has been pushed from July 16 to September.We cannot help but be skeptical about this. Every time this report was due, with timing happening to coincide with a key date in the KC-X tanker competition, the WTO mysteriously postponed its release date. Call us conspiratorial, but it seems that multiple “coincidences” are at work here. The announcement came from the US Trade Representative’s Office. Hmmm…..
Here is the Airbus statement concerning the delay:
747-8 vs A380 costs: airlines weigh in
In the ever-present back-and-forth between Boeing and Airbus about the costs of the 747-8 vs. A380, each company claims its airplane has lower costs.
Boeing claims the 747-8 has double-digit lower costs, to which Airbus indignantly says Boeing–not to put too fine a point on it–is lying. Airbus is unusally blunt on this topic.
Well, two airlines weighed in within days of each other.
Emirates Airlines says the A380 has 16% lower costs than the 747-8, as reported in this article from Business Week. Emirates has ordered the A380 and the 747-8F.
Go to commercial markets for A350
Update, July 8: This just moved from Bloomberg: The release of the WTO’s Interim Report on the EU complaint about “illegal” subsidies to Boeing has been pushed from July 16 to September.
We cannot help but be skeptical about this. Every time this report was due, with timing happening to coincide with a key date in the KC-X tanker competition, the WTO mysteriously postponed its release date. Call us conspiratorial, but it seems that multiple “coincidences” are at work here.
Original Post:
With the WTO ruling that launch aid for Airbus is legal providing terms and conditions are done on a commercial basis, we see no rationale for Airbus to continue with “reimbursable launch investment” (RLI) from its European government owners and partners.
But Louis Gallois, CEO of Airbus parent EADS, says they’ll tap RLI from the governments anyway.
Our take on the WTO panel report
Well, we have necessarily done a quick scan of the 1,000+ page document, skipping all the history and back-and-forth and concentrating on the findings and conclusions that begin on PDF page 288 of the document.
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Podcast with Scott Hamilton, Richard Aboulafia and Addison Schonland.
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As we noted in the previous post, as far as we are concerned there is a pox on Airbus and Boeing, for both have sinned (with Boeing’s sins yet to be detailed in the forthcoming Interim Report due July 16). Both need to go to Confession and then go forth and sin no more.
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. Read more
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 www.boeing.com/wto
Read more
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.
“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?