Tuesday, May 15, 2018

WTO Finds Airbus Likes To Cheat

The Airbus less advanced higher priced family of aircraft gets a consortium of cash flow from various European countries. Particularly France and Germany. The cash penalty will be about $22 billion to Airbus thus jacking the price higher in customer bid wars against the Boeing products. Speaking of Boeing, it too has its WTO findings for about 8 Billion which is a significantly less than the  Airbus $22 Billion. The Boeing finding is for its 777X wing plant for which the state of Washington incentivized Boeing into building the massive 777X wing operation now residing in Everett,  Washington having follow-on employment for those moving to the North of Seattle city.

Boeing has swallowed the bitter pill but Airbus will find itself less able to swallow its own $22 Billion tags the WTO has imposed.

What all this means is, an Airbus stoppage of future new widebody development going forward. A greater widebody price proposal for its customers during head to head bidding against Boeing for its wide-bodied aircraft, and a further beating from Boeing's sales team in the open market.

Why this determination against Airbus, Because it has caused irreparable damage to Boeing's market over the last decade or longer. Airbus with its subsidies has been able to compete with Boeing when it couldn't do so without the government subsidies covering financial shortfall during the development of its less advanced A350 and A380 programs. Boeing had a deferred cost of about a $30 Billion money pit when it developed its 787 families of aircraft. Airbus received roughly $22 Billion from the government when it developed a competing A350 or A380. Airbus has blatantly cheated and Boeing followed suit but to a lesser scale with its 777X program. Boeing is better positioned to pay its fine from the WTO.