Thursday, March 18, 2010

A study from the Lexington Group, a defense policy think tank, says Airbus relied on illegal subsidies to overtake Boeing and put thousands of Americans out of work.

The study was released just as the World Trade Organization nears a final ruling on unfair subsidies in the coming week.

“What my report shows is that the Airbus business model is basically predatory,” said Dr. Loren Thompson, Lexington Institute Defense Analyst.

The prey in this case is Boeing, and by extension, the companies who supply them.

“The biggest form of unfair subsidy that Airbus gets is ‘launch aid,’” said Dr. Thompson.

Launch aid refers to low-cost loans allowing Airbus to develop aircraft faster than Boeing, therefore allowing them to be sold for less due to cheap, no-risk financing.

As recently as 20 years ago, American planemakers controlled 85% of the market.

In 1970, four European governments established EADS, the parent company to Airbus.

Since then, two U.S. planemakers have dropped out of the business. Additionally, since 2000, Airbus has become the dominant supplier to airliners around the world.

The WTO will release its final ruling on the trade dispute, which accuses the Europeans of unfairly subsidizing Airbus. Meanwhile, the Europeans are accusing the U.S. of illegally subsidizing Boeing.