Airbus must seek state loans again-German official
Wed Nov 26, 2008 10:10am ESTTHE HAGUE, Nov 26 (Reuters) - European planemaker Airbus has pulled back from a plan to find a market-based alternative to a system of government loans which are at the centre of a major trade row with the United States, a German official told Reuters on Wednesday.

Airbus, which has never publicly abandoned its commitment to seeking European government loans to develop its aircraft, studied market alternatives for raising funds a few months ago, the official said.

"They had ideas three or four months ago for a more market-oriented approach, but now there is no money available," Germany's State Secretary at the Federal Ministry of Economics and Technology, Peter Hintze, said in an interview on the sidelines of a space conference.

"The financial crisis pushed everything back. Now we are looking again at goverment loans," he said.

"Germany is willing to discuss Airbus' next plane, the A350, using this model, if it is compatible with world trade rules," he said.

Asked to comment on the remarks, an Airbus spokesman said: "We continue to consider all sorts of options to ensure a level playing field with Boeing."

(Reporting by Tim Hepher)



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Gosh I am absolutely amazed and slightly amused. Why is it that even in these tough financial times Boeing can get commercial financing and Airbus/EADS can not do so?

...is the formal response I got a short while ago from Airbus' PR dept.

What loan big enough to cover development of a new model did Boeing ask for in the last two - three months?

Why not join them? We're bailing out banks and insurance companies and taking (preferred) stock in them. Auto companies are likely next.

Does anyone think it likely that Obama & Company will nix the WTO complaint and start pouring money into Boeing as well?

You are right on this one. Boeing has said they may help finance purchases for their customers.

Interestingly enough so did Airbus.

But Boeing does it with profits, where as Airbus/EADS gets loans from their governments (which has a mythical payback structure) to pay for airplane development so they might finance airplane purchases.

Mythical, hardly. The agreement is publicly available and links has been provided to you multiple times. On top of that there were yearly meetings scheduled where the details were presented by both sides. Of course US failed to attend those meetings to avoid showing how much subsidies Boeing received. Subsidies that Boeing doesn’t pay back at all. Even better, Boeing gets paid by the US government to do their own research. Talk about double dipping.

B.t.w. where is the mythical loan you talked about before that somehow became from profits instead?

Let's wait for the WTO rulings to see who is right and wrong.

WTO is only about if they are acceptable, i.e. packaged right. Not if they exist.

How about that loan you claimed?

Airbus gets all the same types of subsidies that Boeing gets (tax breaks, infrastructure improvements, defense contracts, etc. Subsidies that Airbus doesn't pay back at all.) But Airbus gets one subsidy that Boeing doesn't get--launch aid, which are sweetheart loans below commercial rates. To make the deal even sweeter, Airbus doesn't have to pay these low interest rate loans back if the program doesn't make a profit (think A380).

As always there are two points you consistently fail to remember.

1. It is not the type of subsidy that matters. It is its impact that matters. If I gave you 10 USD and your brother 1,000,000 USD did I treat you equal? You both got money from me...
2. US was free to give RLI's in the same way European countries gave Airbus RLI's, i.e. it was open to Boeing aswell. That the US government didn't grant them is a different thing but similar setup was proposed by Kansas for example. Of course in that case the repayment would be paid back with income tax withholdings... so would it actually be a repayment?

Then of course there is the issue that US broke the '92 agreement on at least two points.

Looks like we will just have to wait for the WTO ruling, Falcon it doesn't matter what any of us think or say, does it?

^


Why do you think the WTO ruling will change anything? All that will happen is that things get packaged slightly different. There are enough examples of that on both sides.