Mulally mocks Airbus’ protests
Published 9:00 pm Tuesday, April 5, 2005
SEATTLE – Two top Boeing Co. executives dismissed claims Tuesday by European Union trade negotiators that Washington state is subsidizing their company in violation of World Trade Organization rules.
“I love their complaints about the state of Washington,” a mocking Boeing Commercial Airplanes chief Alan Mulally told a fundraising gathering for Western Washington University, held in Seattle. “They’re not right at all.”
The $3.2 billion in tax breaks the Legislature granted the aerospace industry in 2003 are “a far different deal from just getting upfront money you don’t have to pay back if things don’t work out well,” added Mike Bair, the senior vice president in charge of Boeing’s 787 program, who spoke at a separate briefing for reporters in Bellevue on Monday.
Airbus parent company EADS itself could reap the benefits of that tax break, if it decides to locate in the state a proposed factory for converting A330 jets into aerial refueling tankers for the U.S. Air Force, Mulally noted. Three Washington communities, including Snohomish County, have submitted proposals to be considered for that plant.
“This is all about competitiveness in the state of Washington,” he said. “It never was for just Boeing.”
European and American trade negotiators have set themselves a Monday deadline for working out an agreement on reducing aerospace industry subsidies, however talks collapsed two weeks ago after an angry telephone exchange between the leaders of the talks.
The U. S. government wants the European Union to stop providing the low-interest loans that have helped Airbus develop a new line of aircraft and allowed Airbus to pass Boeing as the world’s leading jet-maker.
“Clearly they don’t need launch aid,” Mulally said. “They’ve gotten very used to the taxpayer money to support their business plans.”
EU negotiators say they’re willing, but only if Boeing is cut from federal research and defense contracts and from aid such as the Washington state tax package.
The tax package was put together as part of the deal that prompted Boeing to keep the 787 final assembly in Everett. But the tax break – a two-stage reduction in the state’s business and occupations tax that takes effect in 2007 – was granted to all aerospace companies located in the state.
Boeing will have to continue building 787s for 20 years to reap its full share of the tax benefit, Bair noted.
At the same time, the EU negotiators are trying to hide all the assistance local governments provide for Airbus in Europe, including new roads and other infrastructure, Bair said.
Airbus officials have said they plan to ask their governments for loans to help them develop a new A350 jet that will counter Boeing’s Dreamliner.
Whether they get the aid or not, Bair said Boeing has “always assumed Airbus would do something” to counter the 787. “When we put together the business plan for this airplane, we always assumed a robust competition,” he said.
Boeing is confident the 787 will outperform whatever Airbus puts up against it, Bair said.
Mulally agreed. “We’ve never been in better position and in better competitive shape,” he told the WWU supporters. “We welcome competition. We just want it on commercial terms.”
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
Boeing deliveries
Boeing Co. said Tuesday it delivered 70 commercial airplanes in the first quarter, six fewer than a year earlier and behind the pace it needs to meet its 2005 target.
The aerospace company now needs to average about 83 deliveries in the remaining three quarters to reach its projected total of 320 for the year.
Boeing was beaten by rival Airbus SAS in airplane deliveries in 2003 and 2004.
The bulk of deliveries – 54 – in the January-through-March quarter were for its single-aisle 737. The company also delivered eight widebody 777s, three 747s, three 717s and one 757 and 767 each.
