Published: Thursday, September 3, 2009
Ruling expected Friday in Boeing-Airbus trade dispute
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The Boeing Co.
The Boeing Co. has installed the engines on its first 747-8 Freighter, shown here on the factory floor, marking another milestone toward the first flight of the jumbo jet later this year. Boeing finished installation of the GEnx-2B engines on the first freighter in Everett last week, the company said Wednesday. The GE engine for the 747 is based on the GEnx-1B engine used for Boeing’s delayed 787 Dreamliner. The new engine and design are expected to enable the 747-8 to use about 17 percent less fuel than a 747-400. Boeing has won 78 orders for its 747-8 Freighter. It plans to fly the first freighter later this year, with first delivery in the third quarter of 2010.
The Boeing Co. and Airbus expect to find out Friday who won the first round in their epic trade dispute, when the World Trade Organization rules on a five-year-old U.S. complaint that argues European governments unfairly financed Airbus’ climb to the world’s No. 1 planemaker.
The ruling could pressure Europe to rethink how it funds a strategic company that employs 52,000 people and provides work for numerous suppliers. It could also affect competition for a $35 billion U.S. Air Force contract for air tankers.
The United States hopes the trade body will condemn the European Union, representing Britain, France, Germany and Spain, for providing what it calls illegal subsidies that give Airbus an advantage in a market worth $3 trillion over the next two decades.
For its part, the 27-nation EU believes a verdict in its favor would shift the focus back onto what it considers the backdoor funding Boeing receives from NASA and the U.S. Defense Department. That complaint from the EU will be the subject of a second ruling expected in six months.
Beyond the two companies, the dispute could have its greatest impact on emerging powers such as China who want to break the two-company dominance of the airliner industry by settting global standards for how governments can help develop commercial planes. The ruling is expected to be confidentially given to U.S. and European diplomats in Geneva, trade officials and the companies say.
“This is something that is not going to have anything good for these two companies,” said Frederik Erixon of the European Centre for International Political Economy, a Brussels think tank. “Boeing is going to win on key issues in the first ruling and Airbus is going to win on key issues in the second ruling.”
The U.S. says Airbus has received development financing, contributions and debt relief worth the equivalent of up to $205 billion, helping it develop new aircraft, such as its A350 and A380 jets, capture long-standing Boeing customers and become the world’s top seller of planes.
The EU, meanwhile, points to tax breaks, development funding and outright grants to Boeing as examples of wrongdoing by the U.S. government and the states of Kansas, Illinois and Washington. It also accuses the U.S. of providing vast amounts of hidden support to Boeing through military contracts, citing a total subsidy figure through 2024 of $23.6 billion. Using the U.S. methodology, Brussels says those subsidies would actually be worth $305 billion.
In other aerospace news Wednesday:
737 order: Boeing said Wednesday that it had received a firm order for three 737s from Turkmenistan’s national flag carrier Turkmenistan Airlines. The order is worth $192 million at list prices, though airlines rarely pay list prices.
The ruling could pressure Europe to rethink how it funds a strategic company that employs 52,000 people and provides work for numerous suppliers. It could also affect competition for a $35 billion U.S. Air Force contract for air tankers.
The United States hopes the trade body will condemn the European Union, representing Britain, France, Germany and Spain, for providing what it calls illegal subsidies that give Airbus an advantage in a market worth $3 trillion over the next two decades.
For its part, the 27-nation EU believes a verdict in its favor would shift the focus back onto what it considers the backdoor funding Boeing receives from NASA and the U.S. Defense Department. That complaint from the EU will be the subject of a second ruling expected in six months.
Beyond the two companies, the dispute could have its greatest impact on emerging powers such as China who want to break the two-company dominance of the airliner industry by settting global standards for how governments can help develop commercial planes. The ruling is expected to be confidentially given to U.S. and European diplomats in Geneva, trade officials and the companies say.
“This is something that is not going to have anything good for these two companies,” said Frederik Erixon of the European Centre for International Political Economy, a Brussels think tank. “Boeing is going to win on key issues in the first ruling and Airbus is going to win on key issues in the second ruling.”
The U.S. says Airbus has received development financing, contributions and debt relief worth the equivalent of up to $205 billion, helping it develop new aircraft, such as its A350 and A380 jets, capture long-standing Boeing customers and become the world’s top seller of planes.
The EU, meanwhile, points to tax breaks, development funding and outright grants to Boeing as examples of wrongdoing by the U.S. government and the states of Kansas, Illinois and Washington. It also accuses the U.S. of providing vast amounts of hidden support to Boeing through military contracts, citing a total subsidy figure through 2024 of $23.6 billion. Using the U.S. methodology, Brussels says those subsidies would actually be worth $305 billion.
In other aerospace news Wednesday:
737 order: Boeing said Wednesday that it had received a firm order for three 737s from Turkmenistan’s national flag carrier Turkmenistan Airlines. The order is worth $192 million at list prices, though airlines rarely pay list prices.
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