Airbus and public subsidies

The Los Angeles Times takes a welcome stance in favor of free markets and against government subsidies. At least in the case of Airbus, which benefits from enormous low interest loans used to finance the development of new airliners intended to compete with Boeing, a major Los Angeles—area employer.

Airbus will dip its toe into the free market and finally compete with U.S. rival Boeing on a level playing field — for now, anyway. The European aircraft maker announced Thursday that it would build its new A350, and to cool down a boiling trade dispute with the United States, it passed up more than $1 billion in government subsidies to develop the plane.

The move is a tentative step, akin to a spoiled child passing up his weekly allowance. Before it launched the A350 program, Airbus lined up commitments from Britain, France, Germany and Spain to front a third of the plane's $5.7—billion development cost. That infuriated Washington, which doesn't offer such sweet deals when Chicago—based Boeing develops new airplanes. For now, Airbus will go ahead without the aid, but the loan commitments from those governments are still there. Who's to say Airbus won't take the cash should the A350 program run into trouble?

If anything, Airbus' move to temporarily forgo A350 subsidies shows it has no credible legal case in a bitter fight between Europe and the United States. The U.S. has taken its case to the World Trade Organization, alleging that Airbus has received $15 billion in illegal government subsidies in the form of low—interest loans that don't always have to be repaid.

Ed Lasky   10 08 05

The Los Angeles Times takes a welcome stance in favor of free markets and against government subsidies. At least in the case of Airbus, which benefits from enormous low interest loans used to finance the development of new airliners intended to compete with Boeing, a major Los Angeles—area employer.

Airbus will dip its toe into the free market and finally compete with U.S. rival Boeing on a level playing field — for now, anyway. The European aircraft maker announced Thursday that it would build its new A350, and to cool down a boiling trade dispute with the United States, it passed up more than $1 billion in government subsidies to develop the plane.

The move is a tentative step, akin to a spoiled child passing up his weekly allowance. Before it launched the A350 program, Airbus lined up commitments from Britain, France, Germany and Spain to front a third of the plane's $5.7—billion development cost. That infuriated Washington, which doesn't offer such sweet deals when Chicago—based Boeing develops new airplanes. For now, Airbus will go ahead without the aid, but the loan commitments from those governments are still there. Who's to say Airbus won't take the cash should the A350 program run into trouble?

If anything, Airbus' move to temporarily forgo A350 subsidies shows it has no credible legal case in a bitter fight between Europe and the United States. The U.S. has taken its case to the World Trade Organization, alleging that Airbus has received $15 billion in illegal government subsidies in the form of low—interest loans that don't always have to be repaid.

Ed Lasky   10 08 05