Boeing: Compete, Don't Complain

Here they go again. Boeing Co. executives are pushing the Clinton Administration to challenge European governments on aid to the four companies that own archrival Airbus Industrie. Calling up the ghosts of Airbus subsidies past won't make Boeing more competitive. And it won't stop Airbus from building a new $12 billion superjumbo jet either. What it will do is unnecessarily exacerbate trade relations between the U.S. and Europe.

Analysts who follow Boeing have dissected Airbus accounts, opaque as they are. The bottom line, they say, is that Airbus is profitable--not hugely profitable, but it doesn't need subsidies to compete. For two decades, Boeing has hurled accusations at Airbus of unfair government aid. It decried the low-interest development loans Airbus partners received from Germany, France, Britain, and Spain, to help reach critical mass. Airbus railed in return about the $20 billion a year in research and development funding Boeing receives from the Pentagon for its military operations--much of which can double up for civilian aircraft R&D. The war of words was resolved by a 1992 bilateral trade agreement with the European Union that limited government aid to one-third of a new aircraft's development costs.

The truth is, Airbus partners have paid back billions in loans to their governments, with interest. Indeed, Airbus' four partners are grooming their consortium to become a transparent, publicly traded, profit-driven corporation. As of June, all four are private companies. The next era of competition will be judged by shareholders comparing profits. The sooner Airbus comes clean with its profits, the better. Boeing should, meanwhile, cool its jets and stop fueling trade frictions. Better to concentrate on slashing costs and building better planes.

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