EADS' Executives Misrepresent Airbus Subsidy Situation

Strategic Insights -

EADS' executives are attempting to justify billions in launch aid for the A350 by claiming Boeing's 787 is "probably the most subsidised aircraft for a long time." However, this assertion is based on a manipulated construction of reality that ignores the facts. In reality, Airbus has received nearly $4 billion in launch aid for the A380, as well as billions more in infrastructure supports prohibited by the World Trade Organisation. Furthermore, Airbus and its parent companies receive numerous forms of indirect government support, including state and local tax breaks, third-country support, and European government research and development funding.

Key Takeaways:

  • EADS' joint chief executive, Thomas Enders, incorrectly claims Boeing's 787 is the most subsidized aircraft, ignoring the fact that Airbus has received nearly $4 billion in launch aid for the A380.
  • Airbus and its parent companies receive various forms of indirect government support, including state and local tax breaks, third-country support, and European government research and development funding.
  • EADS executives have publicly claimed Airbus can fund the A350 with their own money, yet they choose to request European taxpayers to cover one-third of the risk.
  • Boeing supports the US government's efforts to eliminate subsidies to Airbus through negotiation or litigation at the World Trade Organisation.
  • EADS' executives are using a flawed argument to justify continued illegal aid to Airbus, citing alleged indirect subsidies Boeing receives.
  • Airbus benefits significantly from government debt forgiveness, infrastructure projects, and equity infusions.
  • The A350's profitability would not be "destroyed" without government support, as EADS executives claim, as they have previously stated the company can fund the aircraft on its own.
  • The US government's efforts to end subsidies to Airbus are supported by Boeing, as they believe it would level the playing field.

Statistics:

  • $4 billion: Amount of launch aid received by Airbus for the A380.
  • Bilions: Additional dollars in infrastructure supports received by Airbus, prohibited by the World Trade Organisation.
  • 30%: Portion of the A350's risk covered by European taxpayers, as requested by EADS executives.
  • $[Not specified]: Amount of state and local tax breaks received by Airbus and its parent companies.
  • [Not specified]: Amount of European government research and development funding received by Airbus.
  • [Not specified]: Amount of government debt forgiveness received by Airbus.

Sources:

  • Sir Ted Austell, "EADS firm on launch aid for A350", (September 14)
  • Thomas Enders, EADS joint chief executive, quoted in the above source.
  • World Trade Organisation, "Subsidies to Airbus: US Lodges Formal Complaint" (no date mentioned)
  • Boeing Company, "Boeing Supports US Government Efforts to End Subsidies to Airbus" (no date mentioned)