The strong U.S. case against Airbus

America has finally taken Europe to the World Trade Organization over "launch aid" to Airbus. Europe says it has a beef just as strong over our state's tax cuts for Boeing. Fine. File your complaint. Let the WTO say who has the firmer grasp of the facts.

Americans have argued about the value of the WTO for years. Let's see how it handles this. The essence of the U.S. case is that local tax breaks are available to both companies, and so are military contracts. They cancel each other out. The thumb on the scale is launch aid — the practice of European governments providing up-front, taxpayer cash for Airbus to develop new airplanes.

A new airplane is a huge risk. It was often said Boeing "bet the company" on each of its major aircraft. A third of a century ago, after its bet on the 747, Boeing — and Seattle — almost turned out the lights. An experience like that reminds everyone — managers, workers, suppliers, financiers — to make careful decisions. Double-check. Go slow.

Airbus has never had to live like that. With the A-380, its new, bigger-than-the-747 offering, one-third of development cost was paid by European taxpayers. If the A-380 succeeds, Airbus will have to pay the billions back under generous terms. If it fails, the loan will be forgiven. That means Airbus can push ahead with the A-350 — its rival to the Boeing 787 — without worrying nearly so much about the earlier project paying out.

Every Airbus plane has been financed this happy-go-lucky way. At the outset, when Airbus was an infant, that may have been the only way. But Airbus is a mature company now. It has a full product line. It is profitable. In the past five years, it has increased its global market share by 20 percentage points, to 50 percent of large commercial aircraft, and its order book to 60 percent. It is a company fully grown. It no longer needs to be diapered by the treasuries of Europe.

Boeing's estimated $3 billion in state tax concessions is not money up-front. It is money Boeing will earn over 20 years by designing, testing, assembling and selling its airplanes — money that it generated itself but would have had to pay to the state.

We don't think the taxpayer check Airbus gets is comparable to the tax concessions Boeing gets. If the WTO says it is, fine: End them both. But "launch aid" has to go.