Anyone hoping a World Trade Organisation ruling on 4 September will clear up once and for all the murky transatlantic row over subsidies to Airbus will be disappointed. Although both the European airframer and its US rival Boeing will be finding plenty in the confidentially published preliminary findings out of which to make political capital, it could be 2013 before a final verdict is delivered on a dispute initiated by Washington in 2004 at the instigation of then-Boeing chief executive Harry Stonecipher.
Even then, it is unclear what will happen. Boeing is banking on a judgement that government loans to Airbus, made at interest rates well below what the manufacturer could secure on financial markets, damaged it commercially by giving its rival an unfair advantage. It believes this will embarrass European politicians into withdrawing launch aid from future Airbus projects.
FINAL RULING
When the action kicked off five years ago, funding for the A380 was at stake. By the time a final ruling is made, the A350 XWB programme - which has secured launch aid from France, Germany and the UK - will be under way. As the WTO has no power to rule retrospectively - in effect forcing early repayment of A350 loans - Boeing's best hope will be frustrating Airbus efforts to secure government help to develop a successor to the A320 family.
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Airbus remains sanguine. Although it accepts the WTO may quibble with aspects of the loans, it insists all its launch aid was on terms close to rates offered by commercial lenders. Since 1992 - when Europe and the USA agreed a framework regulating government aid to the industry, terminated by Washington in 2004 - Airbus claims it has paid back 140% of what it borrowed.
Boeing does not dispute Airbus has refunded the taxpayer (thanks to the success of the A320 family over the past 20 years), but claims that for projects as risky as the A380, private lenders would have demanded punitive returns. Government backing allowed Airbus to develop prestigious airliners such as its superjumbo, which would never have seen the light of day had the European company been a purely commercial company, claims Boeing.
This is where the WTO has to wrestle with a mass of "what ifs". It must decide whether each of a total of 34 funding agreements since 1992 was unfair based on commercial realities at the time. In other words, could Airbus have secured that funding at a similar rate on the open market, and did the loans damage Boeing's ability to market its products to airlines worldwide?
Airbus sources claim Boeing saw the writing on the wall back in 2004. With its rival overtaking it in market share, it seized on European government launch aid as a scapegoat for its business failings, implying since then that subsidies are to blame for everything from the 787 delay to its loss of the US Air Force tanker competition to an A330-based rival backed by Northrop Grumman and Airbus parent EADS.
These sources suggest Boeing will use the draft WTO judgement - which it is bound by confidentiality not to discuss - to galvanise members of Congress to ban the A330 from the relaunched tanker contest as a "subsidised aircraft". The sources say this would be in breach of WTO rules, which stop countries acting in a discriminatory way.
The dispute is further muddied by a counter claim by Brussels that US government spending on Boeing defence products and research and technology amounts to unfair subsidies to its commercial airliner business. That action is still being discussed by a separate WTO panel, which is not expected to report this year.
GENTLEMAN'S AGREEMENT
Airbus says it is prepared to drop its claim if Boeing ends its action, suggesting the best way to come up with a new set of rules is simply: "Let's talk." That seems unlikely as long as Boeing sticks to its position that launch aid to Airbus is wrong per se, and Airbus to its line - that governments have been involved in the aerospace industry for a century and only a bilateral gentleman's agreement on the rules is needed.
But with Bombardier, Embraer, China and Russia keen to break into the Airbus and Boeing large-civil aircraft duopoly, a peace treaty involving only the big two could be out of date by the time the WTO makes its final ruling.
Source: Flight International
