New battle in the skies between American Boeing and European Airbus.
The American aerospace giant has asked the US government to demand transparency from the EU regarding the €3.42 billion loan granted to Airbus, according to reported by Reuters.
In a letter addressed to the United States Trade Representative (USTR), Jamieson Greer, seen by the international news agency, Boeing expressed surprise at the announcement of the loan on June 29 by the European Investment Bank (EIB), which represents the largest corporate loan ever granted to the Toulouse-based aircraft manufacturer.
Therefore, Boeing asked the USTR to request from Brussels a “full account of the terms of this loan” and to explain why it is compatible with the 2021 truce agreement between Boeing and Airbus regarding their mutual claims on aviation subsidies. The request comes after the indefinite extension of the trade truce between the two companies on aerospace industry subsidies and while Airbus is preparing the development of a new aircraft planned for 2030.
All the details.
BOEING’S LETTER TO THE US GOVERNMENT
According to Reuters, in the letter addressed to the USTR, Boeing asks the Office of the United States Trade Representative to obtain from the European Union a “full account of the terms of this loan” and to clarify why it is compatible with the 2021 truce agreement on mutual disputes regarding aerospace subsidies, which provided for an “open and transparent process.”
The American manufacturer also emphasizes that the loan announcement, including an initial tranche of one billion euros, was made public just four days after the European Union’s decision to extend the suspension agreement. “At the very least, the timing of this loan is surprising,” Boeing noted in its letter.
THE EIB LOAN TO AIRBUS
As already mentioned, on June 29 the EIB announced the provision of €3 billion in financing to the European aircraft manufacturer. This is the largest amount ever granted by the EIB to a European company. Specifically, that day the financial institution signed the first tranche of this aid, a loan of €1 billion to Airbus. The agreement fits within the EIB’s mission to finance, within the European Union, projects supporting ecological transition, Europe’s defense capabilities, innovation, and the strengthening of the European industrial base, according to the EU bank’s statement.
THE EU BANK’S STRATEGY
“This new financing – unprecedented in the history of the EIB – aims to provide Airbus not only with the capacity but also the flexibility needed to invest long-term in research, development, and innovation, spanning from commercial aviation to security and defense sectors,” said Ambroise Fayolle, EIB Vice-President responsible for operations in France, to Afp. The funds will also support Airbus’s research and development activities aimed at reducing CO2 emissions from its aircraft. “By supporting Airbus, we also support the entire European aerospace and aeronautics supply chain, helping to ensure the long-term sustainability of our industries, their local roots, skilled employment, and Europe’s technological strength,” Fayolle added.
THE LINK TO THE FUTURE SUCCESSOR OF THE A320NEO
Yet, in the letter addressed to the USTR, Boeing links the European financing to the industrial plans announced by Airbus. The European group has indicated 2030 as a possible start date for the development of the successor to the A320neo.
Before the Farnborough International Airshow, Airbus CEO Guillaume Faury told Aviation Week that the new program, internally codenamed “eAction,” could take shape right at the beginning of the next decade.
According to the American aircraft manufacturer, “The timing of this significant loan also coincides with public statements from Airbus leadership committing to a launch date for a new aircraft, which raises further questions about both the scale and intent of this historic economic aid package.”
THE RESPONSES
“This is a normal loan, with interest, that falls within the EIB’s overall financing activity,” said a spokesperson, quoted by Reuters. Airbus CFO Thomas Toepfer told journalists in London that the loans were made “completely on market terms.”
THE TRUCE ON SUBSIDIES BETWEEN BOEING AND AIRBUS
Boeing’s request comes against the backdrop of the long-standing dispute between the United States and the European Union over public subsidies to the aerospace industry.
The aviation subsidies dispute that has marked nearly two decades of relations between the United States and the European Union led to the introduction of reciprocal tariffs by the two commercial superpowers. In May 2018, the WTO appellate body ruled that the EU and its member states had not fully complied with previous WTO decisions regarding subsidies received by Airbus. Consequently, the World Trade Organization allowed Washington to adopt countermeasures against European exports worth up to $7.5 billion. The United States imposed the measures in October 2019.
In March 2019, the WTO appellate body confirmed that the United States had also continued to illegally support its aircraft manufacturer, Boeing, to the detriment of Airbus. After receiving WTO authorization, the EU then imposed (in November 2020) tariffs of $4 billion on US exports to the EU.
The US countermeasures in the Airbus case affected 19 different product categories, including aircraft, wines and spirits, dairy products, cheeses, and machinery, worth $7.5 billion.
The EU countermeasures in the Boeing case affected 130 different product categories, including aircraft, nuts, tobacco, alcoholic beverages, handbags, and tractors, worth $4 billion.
The rapprochement began in July 2020, when Airbus and the involved states announced decisive steps to ensure full compliance with international obligations arising from the WTO ruling. In 2021, Washington and Brussels reached a five-year truce, suspending tariff measures related to the dispute.
POSSIBLE IMPACTS ON TRADE TALKS
As Reuters recalls, last year the Trump administration agreed to exempt aircraft and components from tariffs after briefly imposing duties on the aerospace sector.
Washington has not yet officially announced the extension of the tariff truce related to the Airbus-Boeing dispute, but four people familiar with the matter said both parties have effectively set aside, at least for now, the long-standing dispute within the WTO. Meanwhile, Donald Trump has initiated new talks with US trade partners to address aircraft import issues.
According to a US official interviewed by Reuters, Boeing’s concerns about the loan granted by the EIB to Airbus could end up on the negotiating table.
