EU Governments Could Provide Funding... And Fuel New US
Complaints
European airplane maker Airbus must decide where to seek
additional financing to develop its $17 billion A350XWB, and is
considering government assistance as an option.
When asked about a time frame, Airbus Chief Executive Tom Enders
said, "My hunch is it has to be decided this year," according to
the Seattle Post-Intelligencer.
Airbus, based in Toulouse, France, is developing the A350XWB as
a direct challenge to Boeing's 787 Dreamliner.
Airbus and parent company EADS -- European Aeronautic, Defense
and Space Co. -- must decide whether to seek government loans or
other financing.
France and the other governments where Airbus has principal
operations made an initial commitment in 2005 to assist with
funding if needed. The governments involved have said they will
honor that request.
Such assistance would probably trigger new legal challenges from
the United States, which already has a dispute with the European
Union at the World Trade Organization on aircraft subsidies. Europe
has a case against the US as well.
"New launch aid for Airbus would be unacceptable," said Ted
Austell, Boeing's Vice President for International Policy.
"Following Airbus' repeated calls for a negotiated settlement, it
would be difficult to imagine a greater display of contempt on the
eve of a determination by the WTO on the legality of this
practice."
WTO judges are scheduled to issue the first confidential report
on the US complaint against Airbus in April, with a ruling on the
European case against Boeing about six months later. However, both
rulings could be delayed.
EADS is controlled 22.5 percent by Daimler AG, 15 percent by the
French government, 7.5 percent by French publishing company
Lagardere SCA and 5.5 percent by a Spanish government holding
company. The remaining shares are held by external shareholders or
employees.
The final A350XWB design is to be determined this year, with the
model entering service in 2013. Boeing's 787 Dreamliner has been
delayed until 2009, due to production challenges.
Airbus has a relatively strong financial position at this time,
but anticipates a greater cash flow need as it ramps up production
of the aircraft. Some of the larger subcontractors on the project
are expected to contribute about 50 percent of the needed
investment.
Chief Operating Officer Fabrice Bregier said in a briefing
Wednesday, "We would welcome a funding mechanism... it would be up
to the governments to make it WTO-compliant."