The World Trade Organization’s Appellate Body issued a ruling today that Airbus characterized as a “sweeping loss” for Boeing in the long-running dispute between the U.S. and EU over illegal government subsidies to their respective largest aerospace companies.
Competition between Airbus and Boeing
Airbus and Boeing each finished 2011 with some robust order figures by any standard, but during a time of a tediously slow recovery from economic recession, last year’s figures proved all the more impressive. Still, if one were inclined to view the companies’ respective performances as a race to market share, Airbus appeared to emerge as the clear winner, at least in terms of total unit sales.
The antagonists in the long-running trade dispute over government subsidies to Boeing and Airbus are awaiting World Trade Organization (WTO) comment on the latest U.S. call for sanctions against the European Union.
American Airlines last week revealed its choice of the Airbus A319 and A321 as part of its A320 family fleet order announced in July 2011. Plans call for the A319s to come equipped with CFM56-5B engines, while IAE V-2500-A5s power the A321.
Building on a strong upturn in global airline traffic, Airbus is ramping up production of all its models–A320 family, A330 and A380–while keeping a careful eye on possible supply chain issues that could hit increased output rates for these models and also for the new A350 XWB widebody. Meanwhile, costs and an uncompetitive euro-dollar exchange continue to give headaches to the European airframer’s top management.
The World Trade Organization (WTO) has rejected much of Airbus’s July 2010 appeal against its ruling that the European airframer has unfairly benefitted from subsidies, but its May 18 judgment still leaves plenty of scope for the protagonists to argue over how it gets interpreted.
Some sort of negotiated settlement would appear the best outcome for which either protagonist can hope in the interminable dispute between Airbus and Boeing over alleged subsidies for airliner developments that is supposedly being resolved by the World Trade Organization (WTO).
Neither the U.S. nor the European sides are giving an inch in the prolonged legal, political and public relations battles over allegedly illegal aerospace subsidies. The World Trade Organization’s March 31 ruling on Airbus’s complaint about alleged subsidies to Boeing has already prompted an indignant European Union to appeal on the grounds that it doesn’t sufficiently damn U.S. conduct. As of press time, the U.S.
Airbus plans to deliver between 520 to 530 commercial aircraft this year and the company projects its gross orders to exceed deliveries, resulting in a book-to-bill ratio of greater than one. The projection came as EADS released its year-end financial figures for 2010 today in Munich, where the European consortium noted that last year’s order intake increased 81 percent, to €83.1 billion ($115.8 billion), driven largely by Airbus Commercial.
At Boeing’s colossal plant in Everett, Wash., the February 13 gathering of some 10,000 employees, government officials and customer, partner and supplier reps served not only as a chance to celebrate a long-overdue “unveiling” of the 747-8 Intercontinental, but as a reminder of a painful legacy left by top management a decade or more ago.