WTO Showdown Looms Over Aircraft Subsidies: Airbus Receives "Legally Binding" Pledges

Strategic Insights -

The European Union and the United States are on the brink of a World Trade Organization showdown over aircraft subsidies, as Airbus SAS announced it received "legally binding" government funding pledges for its new A350 jet program. The escalation comes as the company won approval to build the mid-sized A350, designed to rival Boeing's fuel-efficient 787 Dreamliner. The approval has sparked a series of conflicting statements from EU and UK officials regarding the nature and timing of the promised financial support.

Key Takeaways:

  • Airbus Chief Executive Gustav Humbert stated that the company received "legally binding" letters pledging financial support from all four supporting governments: France, Germany, Britain, and Spain.
  • The EU Commission and the British government have issued conflicting statements regarding the timing and nature of the promised financial support.
  • Airbus has set ambitious performance targets for the A350, including a two-month period for negotiating the details of the financial support.
  • The EU has asked the WTO to appoint panelists to decide its case against alleged government subsidies to Boeing Co.
  • The US has also taken a step towards the WTO showdown, asking the organization to appoint panelists to rule on the EU's case against European government funding for Airbus.

Statistics:

  • 2006: The year in which the EU Commission and the British government agreed to "delay committing repayable launch investment"
  • 2 months: The timeframe for negotiating the details of the financial support pledged to Airbus by the four supporting governments
  • 4 countries: The number of governments that have pledged "legally binding" support to Airbus for the A350 program (France, Germany, Britain, and Spain)
  • 1 aircraft: The A350, a mid-sized jet designed to rival Boeing's 787 Dreamliner, for which Airbus has received "legally binding" funding pledges from the four supporting governments.

Sources:

  • The Associated Press, Paris, Friday (no date mentioned)