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Tue, Dec 05, 2006

Airbus CEO Takes Aim At Alleged Boeing Subsidies

Claims Boeing Takes Advantage Of Weak Dollar, Gov't Deals

European planemaker Airbus launched what many are calling a "preemptive strike" this weekend against Boeing. At issue are government subsidies for each manufacturer, from their respective governments. Each side has gone before the World Trade Organization, claiming the other receives too much government help... while also stating its own funding programs are above reproach.

In the latest volley, Airbus President and CEO Louis Gallois once again claimed Boeing has received a massive amount of government help for its upcoming airliner, including more than $3 billion in tax breaks from Washington state, and US defense contracts. The tone of his remarks was notably more pointed than in the past, however.

"We are not in a defensive attitude. We are clearly in an offensive attitude on the heavily subsidized (Boeing) 787," said Gallois during a news conference on the recently-approved Airbus A350XWB.

Gallois also accused Washington of taking advantage of the weakness of the US dollar against the Euro. Reuters reports that, like Boeing, Airbus prices its planes in dollars... but only has half its costs in the US currency. Hedges in place to bring the two currencies closer to parity are due to expire in 2009.

The problem has "taken on a completely new dimension because of the United States' deliberate weak-dollar policy," Gallois said.

Gallois' remarks came three days after Airbus announced approval of its $13 billion dollar A350XWB program. Initial reports claim at least $5 billion of that total is due to come from loan guarantees from the four countries with stakes in the program -- France, Spain, Germany, and Britain.

On Monday, Gallois was careful to avoid specifics on A350 funding.

"We are discussing with governments future R&D funding, but other options are on the table," Gallois said. "We have no imminent (cash) needs. We are only asking for a level playing field. No decision has been taken or is imminent."

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

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