Airbus Rebuts Boeing’s Complaints Over Subsidies
Airbus, the world’s biggest plane maker, said state aid to the company was worth no more than “a hundred thousand bucks” an aircraft, rejecting criticism from Boeing Co. that subsidies gave Airbus an unfair advantage.
On May 19, Boeing Chief Executive Harry Stonecipher said he would “raise the rhetoric” on the loans Airbus received to develop planes because Boeing was “sick and tired of it.”
Chicago-based Boeing gets U.S. government help in the form of indirect subsidies through research money granted from defense projects and the National Aeronautics and Space Administration. Toulouse, France-based Airbus, majority-owned by European Aeronautic Defense & Space Co., receives loans from the British, French and German governments that Boeing says carry interest rates superior to those it would get if it raised money on the commercial market.
“I would encourage everyone here to do a little math,” said Ralph Crosby, chief executive of EADS’ U.S. arm. “Ask yourself: Where’s the subsidy? Well, the subsidy can only be in the area of interest rates. And I’ll tell you in many cases, we are able to get lower interest rates than we’re paying on those loans.” Crosby was speaking to reporters in Bath, England, before the Farnborough Air Show today.
Airbus and Boeing are the only two makers of large commercial jetliners, which typically seat at least 100 passengers and as many as 500.
Boeing last year lost its spot as the world’s biggest commercial-aircraft maker to Airbus, delivering 281 planes compared with Airbus’ 305.
“Airbus is probably building 50 airplanes they shouldn’t be building because they took our market share,” Stonecipher said in an interview in May.
Government funds helped Boeing develop a version of the Joint Strike Fighter, from which it tapped technologies for the new 7E7 plane. Boeing is also using government-funded Japanese suppliers to build its new 7E7 Dreamliner.
Crosby said that assuming that “there may be a 1 [percentage point] interest-rate differential,” if one takes 1% of $4.3 billion, the value of the loans the company has from governments, and divides by the number of airplanes Airbus sells a year, “you’re going to figure out that all this big deal about subsidies is somewhere around 100,000 bucks, and airplanes cost anywhere from $100 million to $250 million.”
Airbus repays the loans from revenue for the new planes. If a plane model does poorly, Airbus doesn’t have to repay the full loan.
“Right now, we’ve got a whole big discussion about something which in the end is, in absolute-value terms, very small,” Crosby said. “It’s unimaginable to me that something of that size could be worth all the rhetoric.”
