New airlines are taking a hit while no longer expanding fleets. This is because one of the greatest things hit economically throughout the worldwide economic downturn was airline travel. Thus, aircraft producers are willing to resort to any means necessary in order to boost the net income, including accepting large – and perhaps questionable – government subsidies. Reuters explains what the World Trade Organization (WTO) ruled when it comes to the American airline producer, Boeing. Boeing was said to have an unfair edge on European competitor, Airbus, because it took out the government subsidies specifically for this purpose. The European union challenged the $20 billion in subsidies.
WTO pointing toward Boeing and Airbus
There will be no official release until mid-2011 of WTO’s ruling against Boeing as it is confidential. It has been released to United States and European Union officials, however. It is also known that both Boeing and Airbus have appealed various findings within the case already. Reuters indicates that if first records of the WTO ruling are accurate, a negotiated settlement between Boeing and Airbus may occur, as the current state of relations in transatlantic aerospace travel is cold at best. The EU gave a cash advance as a government subsidy to Airbus in June 2010.
Tax breaks on the research contracts
It is like we are playing with children. One kid seems upset that an additional kid is intending to do what he got in trouble for a few days ago. National Aeronautics and Space Administration and also the Pentagon gave Boeing $17 billion in research contracts. Also, It got a sweet tax break in Washington State of $4 billion, says European sources. WTO ruled that Boeing broke international trade laws by accepting the contracts and tax breaks, even though the government aid is not technically prohibited. There is a claim that Airbus was glad about the contention. Boeing said Airbus got a stern glance in there. Thus, Boeing felt their actions in accepting government subsidies were acceptable.
Calls for President Obama’s involvement
EU trade spokesman John Clancy told Reuters that “negotiations at the highest political level” could be the only action that will lead to a long term solution to the feud between Boeing and Airbus. United States officials think the EU has been subsidizing the production of the Airbus A350 which is what the WTO decided couldn’t happen and until that stops, the United States will not come to the table. In a statement to the press, Boeing maintained its position that they have done nothing to distort the transatlantic aerospace market when continuing to point fingers at EU practices with Airbus.
Airbus
airbus.com/
Boeing
boeing.com
Reuters
reuters.com/article/idUSTRE68E47T20100915
WTO and Boeing have had better days
youtube.com/watch?v=50fqfmWbXiY
