Boeing's 2005 Success May Hurt In Subsidies Battle

Throwing Jet-A on the contentious, long-smoldering battle over trade subsidies, an Airbus exec stated last week the 1,002 orders Boeing booked in 2005 show the American manufacturer has no trouble competing in the marketplace with its European rival, government subsidies or no.

"Part of the Boeing case is to show damages from unfair competition in the marketplace," said Allan McArtor, chairman of Airbus North America Holdings. "It would appear that it will be difficult for Boeing to show damages in the marketplace."

McArtor's comments, while undeniably self-serving, may gain foothold within the World Trade Organization, where the two aerospace manufacturers are duking it out over the billions of dollars Airbus receives in subsidies from its partner governments -- which give the European consortium an unfair advantage, according to Boeing.

Some experts say Boeing can't have it both ways, however.

"You can't have record sales and say these subsidies are damaging us," said David Pritchard, an expert on aviation trade, to the Chicago Tribune.

Not surprisingly, Boeing maintains subsidies are a long-standing issue, and its recent success does not diminish their negative impact on the American manufacturer. Boeing cites its reduced market share in the last five years -- from 67 percent, to just around 50 percent -- and its need to lay off as many as 400,000 employees in an effort to match costs with Airbus.

"We remain as committed as before to ending the Airbus subsidies," said Christin Baker, spokeswoman for the US trade representative's office. "The facts remain the same. One year doesn't change the fact that there has been substantial injury."

Airbus has yet to report its 2005 numbers, but it is unlikely to match Boeing's record year -- and while the European consortium still built more aircraft last year than its American counterpart, that lead may dwindle as well over the next several years.

Should that happen, Boeing may well win the battle... but lose the war, a victim of its own success -- and any number of other obvious cliches. Stay tuned, this could get interesting...

FMI: www.airbus.com, www.boeing.com