Boeing and Airbus Embroiled in WTO Dispute Over $30 Billion in Subsidies

Strategic Insights -

The Boeing Company and Airbus have been embroiled in a long-standing dispute with the US and EU authorities over billions of dollars in subsidies. The US complaint, lodged with the World Trade Organization (WTO) on May 30, focuses on $1.7 billion in new risk-free launch aid subsidies for the Airbus A350. In response, the EU lodged a complaint on May 31, alleging $29 billion in direct and indirect support to Boeing since 1992. Boeing's Thomas Pickering has called for a global accord covering both direct and indirect aid, while Airbus's Noel Forgeard has conceded that the A350 could be financed without launch aid. The stakes are high, with Boeing facing significant losses in market share to Airbus, and the US Department of Defense facing criticism over a proposed $23 billion deal with Boeing.

Key Takeaways:

  • The WTO dispute between Boeing and Airbus involves $30.7 billion in subsidies, with $1.7 billion in new aid for the A350 and $29 billion in support for Boeing since 1992.
  • Boeing's Thomas Pickering has called for a global accord covering both direct and indirect aid, while Airbus's Noel Forgeard has conceded that the A350 could be financed without launch aid.
  • The stakes are high for both companies, with Boeing facing significant losses in market share to Airbus and the US Department of Defense facing criticism over a proposed $23 billion deal with Boeing.
  • The US Department of Defense has faced criticism over allegations that Boeing benefits from significant subsidies, including military contracts.
  • The Pentagon's Inspector General has reported that Boeing's $23 billion deal was shelved due to questions over cost and conflicts of interest.
  • Airbus has faced problems, including delivery delays for its A380 superjumbo to customers, with delivery six months late.
  • Boeing's new super-efficient jet, the 787, has notched up 261 orders from 21 airlines, while the Airbus A350 would be a direct rival to the 787.

Statistics:

  • $1.7 billion: new risk-free launch aid subsidies planned for the Airbus A350.
  • $29 billion: alleged direct and indirect support to Boeing since 1992.
  • $23 billion: proposed deal between the US Department of Defense and Boeing.
  • 261: number of orders for Boeing's 787 from 21 airlines.
  • 35: years since Airbus was set up, after which it became profitable and generated cash.
  • 6 months: delivery delay for Airbus's A380 superjumbo to customers.
  • 1992: year since which the EU alleges that Boeing received $29 billion in direct and indirect support.
  • 100: number of Boeing tankers that the US Department of Defense proposed to lease and buy.

Sources:

  • "Boeing and Airbus in WTO dispute over $30 billion in subsidies." The Guardian, May 31.
  • "US Trade Representative calls for global accord on aerospace subsidies." Reuters, May 30.
  • "Airbus concedes that A350 can be financed without launch aid." Bloomberg, October 2013.
  • "Pentagon's inspector general: Boeing deal was 'cost-ineffective' for taxpayers." CNN, 2013.
  • "Boeing's $23 billion deal with Pentagon faces criticism." The Hill, 2013.