EU, US brace for turbulence at Boeing-Airbus talks

Time is GMT + 8 hours
Posted: 16 September 2004 0030 hrs

Channel News Asia/AFP

BRUSSELS : The United States wants Europe to end all future government support for Boeing's arch-rival in commercial plane-making, Airbus Industrie, or face legal action, a senior official said.

Speaking on the eve of a meeting gathering EU and US aviation experts, John Veroneau, general counsel at the US Trade Representative's office, said it was time to scrap a 1992 agreement that has allowed Airbus to catch up with Boeing.

Veroneau, denying that the new-found US pressure was "election year politics", said: "The infant of Airbus has certainly grown up and is a full-grown adult now. Now is the time to turn off those subsidies."

The official reaffirmed that Washington would sue the EU at the World Trade Organisation -- potentially opening the way to billions in compensation -- if it does not get satisfaction in the talks, which begin Thursday in Brussels.

In a rude shock to a company that once enjoyed overwhelming dominance in the commercial aviation industry, Boeing has now been overtaken by Airbus in aircraft deliveries.

Airbus has, with the acceptance of the US government under the 1992 agreement, been allowed to receive up to one-third of its research and development costs from European governments.

Those subsidies, according to Boeing, have amounted to 35 billion dollars (28.7 billion euros) over the past 12 years.

The issue has become all the more charged politically as President George W. Bush seeks re-election in November.

Bush, speaking on a campaign stop last month at Boeing's production base in Seattle, Washington state, vowed to take the case to the WTO if EU countries do not agree to end the subsidies.

In particular, the US government is anxious to see that such benefits do not apply to future aircraft after the new Airbus A380 line of superjumbos, on which the European company is staking its future.

But EU officials retort that Boeing benefits from "indirect subsidies" through billions of dollars in contracts for military planes and research and development awarded by the US government.

"Any changes to the (1992) agreement should make sure that Boeing does not get any more support than Airbus would get in the form of direct support," European Commission spokeswoman Arancha Gonzalez said Tuesday.

In the tit-for-tat trading of charges, Boeing stands accused by the European Aeronautic, Defence and Space Company (EADS), which controls 80 percent of Airbus, that it has received illegal state aid for its new 7E7 plane.

The co-chief executive of EADS, Philippe Camus, said this month that it should be determined if assistance for the development of the 7E7 was compatible with the 1992 accord and with WTO rules.

While Airbus says the huge A380 is the future of passenger aviation, Boeing is convinced that the market wants a smaller, fuel-efficient workhorse like the 7E7.

At stake is the future commercial success of the two companies, hence the importance that both sides are attaching to the Brussels meeting.

Veroneau denied that Boeing had received direct subsidies from the US government, and said that Britain's BAE Systems, Airbus's other main shareholder, was just as active in the US defence market.

He acknowledged, however, that tax breaks given to Boeing by Washington state would have to be covered in the EU negotiations.

"Any disciplines that would be included in a bilateral agreement would be two-way," the official said, adding: "We need a new agreement. What we are seeking is fundamentally different to the '92 agreement."

The EU says it is not averse to renegotiating the 1992 agreement provided both companies emerge on a level playing field with both direct and indirect support taken into account.

The Airbus plane was painted military gray, an aerial-refueling boom tucked under its fuselage, ready to supply jet fuel to fighters and freighters in far-flung battles.
Along the A-330's body were the words: "U.S. Air Force."

The plane was a scale model, one of the props Airbus brought to the massive Air & Space Conference and Technology Exposition yesterday in Washington, D.C.

Although Airbus has long said it wants to compete against Boeing in the $800 billion worldwide market for aerial-refueling planes, its parent company, EADS, has been particularly aggressive during the three-day trade show. The event, which ends today, showcases the wares of hundreds of defense contractors.

And for reasons no one could explain, the Airbus booth was adjacent to Boeing's, giving executives from both companies an opportunity to eyeball each other and tout their respective planes.

Boeing handed out glossy brochures showcasing the superiority of the 767 as a refueling tanker.

Only three feet away across a strip of carpet, European Aeronautic Defence & Space passed out little water bottles with the words: "Refuel with the KC-330," the Airbus tanker designation.

While EADS significantly ramped up its marketing machine in recent months, Boeing said it is laying low while the Defense Department finishes reviewing the controversial deal to acquire 100 Everett-made 767s to begin replacing the fleet of 40-year-old Air Force tankers.

Secretary of Defense Donald Rumsfeld put the proposed $23.5 billion Boeing deal on hold in May pending a review of Air Force needs, scheduled to be completed by November.

The deal ran into trouble after two Boeing executives were fired following an internal ethics investigation into improper contacts between Boeing and the Pentagon. Subsequent reports questioned whether the Air Force needed to immediately replace the KC-135, which is based on the Boeing 707.

Rumsfeld asked the think-tank RAND to come up with a report, called an analysis of alternatives, which will study options such as refurbishing the current KC-135s and building an entirely new plane specifically for refueling.

EADS officials said yesterday they have supplied RAND with "megabytes" of information about their proposals.

As the Defense Department considers next steps, EADS has been feverishly working to build a refueling boom, the nozzle that is lowered from a tanker and connected to another plane in midflight to transfer 1,200 gallons of fuel a minute.

Boeing owns the technology currently used for refueling booms, so EADS had to develop its own.

Yesterday, EADS engineer David Ferro Romero told reporters the company is about a month from field-testing its new boom. Flight tests on an Airbus airframe are scheduled next year.

Romero said he recently moved from Spain to Washington, D.C., to better communicate with the Pentagon.

Michel Folscheid, marketing director of EADS tankers, also moved here earlier this year from Europe. He said the company is making a long-term commitment to breaking into the American defense industry.

He was cagey about whether EADS wants the Pentagon to open up competition for the 100 planes under discussion. But Folscheid was emphatic that the Air Force would be better served if it replaces the rest of its 500-tanker fleet with both Boeing and Airbus planes.

"We're not here to kill the competition. We're not here to capture 100 percent of the market," he said. "We're here to introduce our product. We're here to introduce competition."

Still, he's not above a little Boeing-bashing.

When asked about Boeing's charge that the Airbus plane is bigger than the 767, Folscheid countered that the 767 itself is bigger than the KC-135 it will replace. "It's a marketing trick to say we're too big," he said.

Boeing contends the Air Force would be able to fit more of the smaller 767s on runway ramps.

John Sams, program director for the Boeing tanker program, said there is no need for the Air Force to diversify its fleet. The company already has all the models the Air Force could possibly want, he said.

While Boeing officials watched EADS hustle the hundreds of Air Force personnel who walked through the crowded hotel ballroom yesterday, they were careful to keep their lips zipped.

Asked whether the sight of an Airbus model carrying the U.S. Air Force insignia made his blood boil, Sams replied: "I don't think we want to go down that road."

He acknowledged, however, that tax breaks given to Boeing by Washington state would have to be covered in the EU negotiations.

The state of Washington (as well as the other 49 states) is NOT bound by the U.S. federal government with regard to incentives or tax exemptions it chooses to give to individuals or legal entities that do do business within its jurisdiction, so long as they do not violate the U.S. or State of Washington Constitution.

BTW, the state of Washington does not impose a corporation net income tax.

I don't get why this article supports you? While the U.S. might "sue" the European Union, the EUropean Union would do the same concerning Boeing's "indirect" money given by the government... put it to you this way, tax break or subsidies, it might be different, but in both cases companies are getting extra money whether you look at it one way or the other, so both companies will have to change and adapt...

ALL The French State champions are subsidized by The French Government

The Human Ressources in these "business firms" are very strictly RACISTS in how they deal with their recruitment process which is done ONLY through State's Schools and State's past business experience.

That's has nothing to do with work experience

Not astonish that at the end of this "selection process" inside these structures the atmosphere is one of a sect (a French sect) totally disconnected with the reality

At this purpose you can find a case about another one similar company called EDF (Electricité de France) with a book wrote by an insider called Corinne Mayer

What is terrific, is that the French population go mad through their admiration for their deep support and total tolerance with these privileges.

The word "Government Lackey" is a compliment for a French citizen

FUCK THE FRENCH LACKEY

TUU

Will you please stop stealing all the smileys!!!

Better return them now, or I shall call the police.

Airbus A310 MRTT Performs First In-Flight Refuelling


(Source: Airbus; dated July 28, web-posted Aug. 9, 2004)


Airbus has successfully started in-flight refuelling trials as part of the certification process of the A310 Multi-Role Transport Tanker (MRTT), achieving in-flight refuelling with an Airbus aircraft for the very first time. The successful achievement by the A310 MRTT of this important milestone marks the arrival by Airbus in the military mission aircraft market.

The in-flight refuelling trials included both “dry contacts” as well as “wet contacts” with two receiver aircraft, one Panavia Tornado and one F18 “Hornet”. Up to 270 US gallons of fuel were transferred for the F18, while the Tornado received up to 260 US gallons.

The Airbus A310 MRTT is based on the A310 passenger jet converted to a multi-role mission aircraft, providing military customers with an economic solution for passenger and cargo transport needs as well as air-to-air refuelling missions.

Currently six A310s are scheduled for conversion to MRTT versions by a consortium of Airbus and Lufthansa Technik AG. Four aircraft will join the German Air Force, while Canada will receive another two. Three of these aircraft, including the one that was used for the refuelling trials, are undergoing conversion at Elbe Flugzeugwerke (EFW) – an EADS company - in Dresden, Germany, while the conversion work on the other three aircraft will be performed at Lufthansa Technik in Hamburg, Germany.

The A310 MRTT is a two-point hose-and-drogue tanker utilising under-wing pods. In addition to the A310 MRTT, the Airbus A330 long-range twin-engined widebody aircraft provides a more capable platform for MRTT applications. The A330 MRTT offers an optional third centreline hose-and-drogue unit as well as an optional refuelling boom.

The EADS Military Transport Aircraft Division is developing an advanced refuelling boom system (ARBS) utilising the latest fly-by-wire technology. An ARBS prototype will be flight tested on an A310 test bed in 2005. Tanker solutions, based on the Airbus A330 airframe, are on offer from EADS Military Transport Aircraft Division and are already under consideration by the British and Australian Armed Forces as well as other interested nations.

The A330 MRTT represents the most advanced solution to military transport and tanking needs and -- together with the A310 MRTT -- constitutes an attractive option as replacement for older generation aircraft.

Airbus is an EADS joint company with BAE Systems.


Take note that one of the place which was refilled was a US-designad and manufactured was an F-18.

Vive la concurrence ("competition")! Enfin (At last!!)!!

How silly it is.
The USA is only showing its muscles before negotiating.
There is an agreement signed by the two sides, so, WTO will surely reject the claim.
The best interest of the two sides is to find consensus.
The EU didn't put higher tax after the steel protectionist decision of Bush, even after the final positive decision of WTO.

Moreover, I suspect there are political reasons behind these statements.
Bush's administration is trying to show how it cares about US industry even if Boeing made some illegal actions for winning military contracts.