Airbus execs dismissive of WTO case

The European Union on Wednesday appealed the World Trade Organization (WTO) ruling that found Airbus had taken billions in illegal government subsidies.

But at the Farnborough International Air Show at an airfield outside London, Airbus executives were coolly dismissive of the entire WTO case.

"I know nothing about it. I'm not spending much time on WTO," said Airbus Chief Executive Tom Enders. "We have lawyers who are well paid for that. ... The whole thing is pretty ludicrous."

In contrast, top Boeing executives defended their aggressive political push to have the ruling factored into the competition for the huge Air Force refueling-tanker contract.

Boeing Chief Executive Jim McNerney said the illegal subsidies have lowered Airbus's capital costs significantly and allowed them to avoid risk.

"For a fixed-price development contract like the tanker, if you perceive your source of funding as being lower risk, you'll take more risk for the bid," said McNerney."It's hard for me to be as aggressive (on price) as they could be. That's why I'm fighting this issue."

In London the weekend before the air show began, the head of Airbus parent company EADS, Louis Gallois, laid out a precise basis for the dismissive European attitude.

He said that the ruling found that two loans — the French loans for the A380 and on the A330-200 programs — were "not inconsistent with WTO rules, which means they are legitimate."

The conclusion Airbus draws is that, though all the other loans it has received broke the rules on technical grounds, in principle there is nothing illegal about loans to launch airplane programs.

The trouble with that argument is that while those two loans were found not to have violated the fair trade rules in the same egregious manner as the rest, they were still found to have violated the rules. Boeing lawyers cite chapter and verse on that from the ruling.

Enders wouldn't address such detail. "That's not our reading," he said.

Rather than deny that Airbus has been heavily subsidized, Enders preferred to focus on alleged parallel subsidies to Boeing.

When the WTO finally rules on those subsidies in a countersuit brought by Europe against the U.S., Enders said, the balance of guilt "will not be lopsided."

"Let's be real," Enders said. "Can you show me one great military or commercial airplane program that has not in some way been subsidized."

Boeing's McNerney was not apologetic about the bitterly political anti-Airbus tanker campaign back in the U.S.

Boeing insists that taking into account Airbus's real airplane-program costs in the tanker battle — asking the Pentagon to add in billions to cover what they say is the ongoing financial impact of those illegal subsidies given to Airbus years ago — is not unilateral retaliation for the illegal subsidies, which would be illegal.

So far though the Pentagon shows no sign of agreeing, Boeing executives say such a reckoning is the only fair way to compare real costs in a competition that is likely to come down to the lowest bid.

"When we make a mistake, for example on the 787 development, we pay every dime," McNerney said. "They won't have to pay every dime if things go wrong."

"They can probably take more risk (on price) than I can," McNerney said. "That's what concerns me."

Washington state's

low profile at show

The Washington state trade booth inside one of the big exhibition halls at the Farnborough Air Show is small and decidedly unimpressive.

Alabama's nearby exhibition booth had much better graphics, but is really not much bigger.

However, the Gulf Coast states' Farnborough presence began with a large eve-of-the-show reception put on jointly by Alabama, Florida, Louisiana and Mississippi at the Orangery restaurant in Kensington Palace.

The reception was attended by a couple of U.S. senators, including Republican Sen. Richard Shelby, Alabama's champion in Congress on the campaign to bring the Air Force tanker to Mobile, Ala.

Alabama Gov. Bob Riley took time off from dealing with the Gulf oil spill to be there, as did representatives from Airbus, EADS, Northrop Grumman, lots of aerospace suppliers and even some Boeing folks. (Boeing has a space center in Huntsville, Ala.)

The official Alabama delegation to the Air Show numbered about 45 people, including a small team from the governor's office on a quick visit. That was half the size of last year's Alabama delegation a year ago at the Paris Air Show, as budget cuts slashed the attendance of city and county officials from around the state.

Washington state had less to cut, but cut it did.

Bill King, the state Department of Commerce official who has led a delegation of local companies to air shows for many years, stayed home this time. Budget cuts.

Last year, he led 10 small local companies to Paris and helped set up business meetings for them. This time, Paul Sinclair, a U.K. trade consultant who is Washington state's official trade representative for all of Europe, organized the visit for just five companies.

The Washington exhibition booth has some pamphlets, a table and three chairs set in 480 square feet of floor space. The back wall has posters with information on the five companies.

The space is one-third smaller than the booth at the Paris Air Show a year ago. There, a model of the Washington-built ScanEagle unmanned-aerial vehicle hung from the ceiling.

This year in London, there's no such hardware at the booth. One of the five visiting companies — Composites Atlantic, which has just five employees in the state — had set out on a shelf a small display of carbon-fiber stringer cross-sections.

The company, half owned by the government of Nova Scotia and half by Airbus parent EADS, manufactures those stringers in Canada. At least the carbon-fiber raw material came from Toray in Frederickson, near Tacoma.

Still, it was rather paltry as a showcase for one of the world's great aerospace centers.

Kevin Steck, Composites Atlantic sales manager in Washington state, noted Wednesday the much larger contingent from South Carolina.

"Maybe we should be doing something on a bigger scale," Steck said.

— Dominic Gates

$28 billion in orders

for Boeing, Airbus

More than $28 billion worth of aircraft have been ordered so far at the Farnborough International Air Show, which runs through Sunday.

Airbus announced Wednesday that Germania ordered five A319s at $372 million; Thai Airways committed to buy seven A330-300s for $1.48 billion, with a firm order expected by the end of summer; and Indonesian national carrier Garuda ordered six A330-200s at $1.1 billion.

Boeing had no new orders, but it disclosed previously booked orders from Air Austral, a French airline based on the island of Reunion for two 777-200s, and from Middle Eastern airline Qatar for two 777-200s, about $1 billion total.

— The Associated Press