Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing CEO promises company is turning around…again April 24, 2024
- 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
So’s your old man
More mirthful back-and-forth between Boeing and EADS.
Boeing today fired off a rebuttal ad to the EADS “Get Real” ad published right after it got back into the KC-X tanker competition.
Boeing also posted this message on its website:
Hoisted on own petard?
Update, May 19: With all the references in Comments about the GAO ruling, we are linking the 150+ page report here, courtesy of Sgt. Mac: GAO KC-X 2008 Protest
Update, May 17, 4:30PM PDT: Reuters has this story that Boeing will bid for the tanker “despite concerns.”
Original Post:
We had been planning to write a column about whether Boeing may be in danger of being hoisted on its own petard when two news items appeared Friday (May 14) that accelerated this column.
The first appeared in Army Times/Defense News (sister publications), quoting an unidentified Boeing executive as saying Boeing might night bid on the KC-X because officials feared it could not win the contest because EADS would be able to undercut the price due to subsidies at Airbus. (This also would explain the question we raised in our post, Why aren’t they talking about the airplane?)
The second story appeared in The Seattle Post-Intelligencer refuting the Defense News piece.
Why aren’t they talking about the airplane?
In the previous post, we talk about the WTO issue being pursued by Boeing and its supporters. In this post we ask, “Why aren’t they talking about their airplane?”
This is about the strangest marketing campaign we’ve ever seen, and one of the things we do is marketing. Boeing has a product–but it’s nowhere to be seen in the public relations campaign.
Isn’t the KC-767 worth talking about?
Playing with fire
The renewed effort by Boeing and its supporters to focus on the WTO ruling against Airbus on illegal subsidies in the KC-X competition (see preceding post) is playing with fire.
The hyperbole by Washington State’s Members of Congress is particularly shrill.
The Reuters article linked in the preceding post reports some key issues that need to be remembered: there remains a pending ruling on the EU complaint that Boeing received illegal subsidies; both sides can appeal; and if the US unilaterally imposes penalties, which a Congressional law mandating consideration of the ruling would amount to, this violated WTO rules.
Boeing goes to Congress on KC-X
Update, May 13:
DOD refuses to give award date
In case anybody wonders, the effort to force DOD to add $5bn (the amount found Airbus illegally benefited on the A330-200) to the KC-X contract price equals $28m per airplane.
11:00 AM PDT: We just received this statement from EADS North America:
“The Boeing Bill is one more attempt to avoid competing on the merits of the tanker. Unlike EADS North America, Boeing doesn’t have a tanker that meets requirements, it faces tremendous technical risk in producing one and is therefore determined to take away the warfighter’s right to choose. We believe our fighting men and women deserve the most capable system—and they deserve the right to select it.”
4:00 PM: More from the “So’s your old man” department, this one also from EADS North America:
1. All reimbursable launch investment loans for A330-200 aircraft development have been repaid – with interest. In fact, since 1992 Airbus and EADS has averaged repaying $1.40 for every dollar received in reimbursable launch investment (this figure covers more than the A330-200). Boeing has received over $16 billion in federal grants, $6 billion in state and local subsidies and over $2 billion in anti-competitive export subsidies already declared to be illegal by the WTO ($1 billion of which came after the WTO ruling) (Editor’s note: this refethis relates to a previous WTO ruling that Boeing illegally benefited from Foreign Sales Corporation [FSC] tax breaks). In fact Boeing is the only company that has been formally sanctioned by the WTO for illegal export subsidies—including illegal support for the 767. (Editor’s Note: FSC and the expectation that the 767 will also be a part of the pending WTO ruling against Boeing, due next month.) No Boeing subsidies have been repaid and all should be considered in the context of Boeing bill introduced today.
2. Boeing also receives significant subsidies from foreign governments. In fact, Boeing has moved the design and manufacturing of major components overseas to secure foreign government subsidies. To date, Boeing has taken at least $1.5 billion from Japan and more than $500 million from Italy to put manufacturing jobs in those countries.
3. A very important issue is that this bill would put the US in the position of violating the WTO agreement. It is illegal under the terms of the WTO treaty to act punitively before the WTO process is completed (it’s called “self help” in the treaty). This is clearly a case of prematurely using WTO findings to justify punitive actions. Article 23 of the Treaty forbids such action and the US could be found to be a treaty violator and subject to sanctions-all for the benefit of Boeing.
Original Post:
Boeing has gone to its supporters in Congress to introduce a bill to force the Pentagon to take into consideration the adverse WTO ruling in the Airbus subsidy case, according to this Reuters report.
Read the report carefully: there are several key points in it, among them: