Aircraft manufacturers as political footballs

It’s easy to think of Airbus and Boeing as corporate behemoths, all-powerful giants capable of getting whatever they want. But even giants have problems, and at the moment both Airbus and Boeing find themselves on the periphery of political battles that have the potential to hit their bottom lines.

Boeing-logoA political battle now underway in the US will soon determine the fate of the US Export-Import Bank. The bank offers loan guarantees and other financing to foreign companies that borrow money to buy US products. In 2013, its guarantees enabled the purchase of $37.4 billion worth of US goods, and one of the big beneficiaries was Boeing. So what is the problem? Well, American carriers, most vociferously Delta, say that giving foreign airlines access to cheaper financing than is available to them gives the foreign carriers, with whom they compete, an unfair advantage. For its part, Boeing says that making the planes foreign carriers buy using Ex-Im guarantees creates jobs in the US and is a huge benefit to the economy. And not only that, says Boeing, cutting off Ex-Im guarantees will give Airbus a big advantage because the EU has no plans to cut off a similar program that benefits Airbus. Obviously, there is some merit in both views, but rather than try to sort it out rationally, the US House of Representatives has adopted its usual method of dealing with problems and turned the fate of the Ex-Im Bank into a strictly partisan shouting match with Republicans saying the Ex-Im bank must be shut down, and Democrats saying it must have its mandate reauthorized.

Airbus logoBoeing may be worried about losing business if the Ex-Im Bank is shut down, but Airbus must also feel like a political football these days. This time, the battle is between airlines in the EU and the Middle East. European carriers are clamoring for restrictions on landing slots assigned to Middle East-based carriers at European airports because, they claim, state backing and access to favorable funding gives Emirates, Etihad, Qatar, and Saudia an unfair competitive advantage. The Gulf carriers maintain that they do not enjoy any government largesse and that they are more successful because they are better run (although not one of them has ever volunteered to open its books to prove this). The war of words has been going on for some time, but took a new twist late last month when Akbar al Baker, the outspoken CEO of Qatar Airways upped the stakes considerably. He was quoted in the German newspaper Handelsblatt as saying that if slots were limited further, “we we will stop buying European aircraft. We have 186 orders at Airbus. What impact would that have on German jobs?”

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