Competition between Airbus and Boeing

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Competition between Airbus and Boeing has been characterised as a duopoly in the large jet airliner market since the 1990s.[1] This resulted from a series of mergers within the global aerospace industry, with Airbus beginning as a European consortium while the American Boeing absorbed its former arch-rival, McDonnell Douglas in a 1997 merger. Other manufacturers, such as Lockheed Martin and Convair in the United States and British Aerospace, Dornier and Fokker in Europe, were no longer in a position to compete effectively and withdrew from this market.

In the 10 years from 2004 to 2013, Airbus has received 8,933 orders while delivering 4,824, and Boeing has received 8,428 orders while delivering 4,458. Competition is intense; each company regularly accuses the other of receiving unfair state aid from their respective governments.

Competing products[edit]

Passenger capacity and range comparison[edit]

Airbus and Boeing have a wide product range including single-aisle and wide-body aircraft covering a variety of combinations of capacity and range but they rarely compete head-to-head. The chart below shows how both manufacturers have responded to meet market needs with slightly different models while covering a broadly similar field.

Typical, two-class passenger capacity versus maximum range in nautical miles of in-production, (future), and out-of-production Airbus and Boeing aircraft since 2000.

Airbus A380 vs Boeing 747[edit]

Cross-section comparison of the Airbus A380(Full length double deck) and the front section of Boeing 747-400(Only the front section has double deck)

During the 1990s both companies researched the feasibility of a passenger aircraft larger than the Boeing 747, which was then the largest airliner in operation. Airbus subsequently launched a full-length double-deck aircraft, the A380, a decade later while Boeing decided the project would not be commercially viable and developed the third generation 747, Boeing 747-8, instead.[2] The Airbus A380 and the Boeing 747-8 are therefore placed in direct competition on long-haul routes.

Rival performance claims by Airbus and Boeing appear to be contradictory, their methodologies unclear and neither are validated by a third party source.[citation needed] Boeing claims the 747-8I to be over 10% lighter per seat and have 11% less fuel consumption per passenger, with a trip-cost reduction of 21% and a seat-mile cost reduction of more than 6%, compared to the A380. The 747-8F's empty weight is expected to be 80 tonnes (88 tons) lighter and 24% lower fuel burnt per ton with 21% lower trip costs and 23% lower ton-mile costs than the A380F.[3] On the other hand, Airbus claims the A380 to have 8% less fuel consumption per passenger than the 747-8I and in 2007 Singapore Airlines CEO Chew Choong Seng stated the A380 was performing better than both the airline and Airbus had anticipated, burning 20% less fuel per passenger than the airline's 747-400 fleet.[4] Emirates' Tim Clark also claims that the A380 is more fuel economic at Mach 0.86 than at 0.83.[5] One independent, industry analysis shows fuel consumption in Litres per seat per 100 kilometres flown (L/seat/100km) as 3.27 for the A380 and 3.35 for the B747-8I, or a fuel cost per seat mile of $0.055 and 0.057 respectively. A possible, as yet uncommitted, re-engined A380neo is expected to achieve 2.82 or 2.65 L/seat/100km depending on the options taken.[6]

Airbus emphasises the longer range of the A380 while using up to 17% shorter runways.[7]The A380-800 has 478 square metres (5,145.1 sq ft) of cabin floor space, 49% more than the 747-8, while commentators noted the "downright eerie" lack of engine noise, with the A380 being 50% quieter than a 747-400 on takeoff.[8] Airbus delivered the 100th A380 on 14 March 2013.[9] From 2012 Airbus will offer, as an option, a variant with improved maximum take-off weight allowing for better payload/range performance. The precise increase in maximum take-off weight is still unknown. British Airways and Emirates will be the first customers to take this offer.[10]

As of July 2014, Airbus has 324 orders[11] for the passenger version of the A380 and is not currently offering the A380-800 freighter. Production of the A380F has been suspended until the A380 production lines have settled with no firm availability date.[12] A number of original A380F orders were cancelled following delays to the A380 program in October 2006, notably FedEx and the United Parcel Service. Some A380 launch customers converted their A380F orders to the passenger version or switched to the 747-8F or 777F aircraft.[13][14]

As of June 2014, Boeing has 51 orders for the 747-8I passenger version and 69 for the 747-8F freighter.[15]

EADS/Northrop Grumman KC-45A vs Boeing KC-767[edit]

The announcement in March 2008 that Boeing had lost a US$40 billion refuelling aircraft contract to Northrop Grumman and Airbus for the EADS/Northrop Grumman KC-45 with the United States Air Force drew angry protests in the United States Congress.[16] Upon review of Boeing's protest, the Government Accountability Office ruled in favour of Boeing and ordered the USAF to recompete the contract. Later, the entire call for aircraft was rescheduled, then cancelled, with a new call decided upon in March 2010.

Boeing later won the contest, with a lower price, on February 24, 2011.[17] The price was so low some in the media believe Boeing would take a loss on the deal; they also speculated that the company could perhaps break even with maintenance and spare parts contracts.[18] In July 2011, it was revealed that projected development costs rose $1.4bn and will exceed the $4.9bn contract cap by $300m. For the first $1bn increase (from the award price to the cap), the U.S. government would be responsible for $600m under a 60/40 government/Boeing split. With Boeing being wholly responsible for the additional $300m ceiling breach, Boeing would be responsible for a total of $700m of the additional cost.[19][20][21][clarification needed]

Modes of competition[edit]

Outsourcing[edit]

Because many of the world's airlines are wholly or partially government owned, aircraft procurement decisions are often taken according to political criteria in addition to commercial ones. Boeing and Airbus seek to exploit this by subcontracting production of aircraft components or assemblies to manufacturers in countries of strategic importance in order to gain a competitive advantage overall.

For example, Boeing has maintained longstanding relationships with Japanese suppliers including Mitsubishi Heavy Industries and Kawasaki Heavy Industries by which these companies have had increasing involvement on successive Boeing jet programs, a process which has helped Boeing achieve almost total dominance of the Japanese market for commercial jets. Outsourcing was extended on the 787 to the extent that Boeing's own involvement was reduced to little more than project management, design, assembly and test operation, outsourcing most of the actual manufacturing all around the world. Boeing has since stated that it "outsourced too much" and that future airplane projects will depend far more on its own engineering and production personnel.[22]

Partly because of its origins as a consortium of European companies, Airbus has had fewer opportunities to outsource significant parts of its production beyond its own European plants. However, in 2009 Airbus opened an assembly plant in Tianjin, China for production of its A320 series airliners.[23]

Technology[edit]

Airbus sought to compete with the well-established Boeing in the 1970s through its introduction of advanced technology. For example, the A300 made the most extensive use of composite materials yet seen in an aircraft of that era, and by automating the flight engineer's functions, was the first large commercial jet to have a two-man flight crew. In the 1980s Airbus was the first to introduce digital fly-by-wire controls into an airliner (the A320).

With Airbus now an established competitor to Boeing, both companies use advanced technology to seek performance advantages in their products. Many of these improvements are about weight reduction and fuel efficiency. For example, the Boeing 787 Dreamliner is the first large airliner to use 50% composites for its construction. The Airbus A350 XWB now being in the process of flight test feature 53% composites.

Provision of engine choices[edit]

The competitive strength in the market of any airliner is considerably influenced by the choice of engine available. In general, airlines prefer to have a choice of at least two engines from the major manufacturers General Electric, Rolls-Royce and Pratt & Whitney. However, engine manufacturers prefer to be single source, and often succeed in striking commercial deals with Boeing and Airbus to achieve this. Several notable aircraft have only provided a single engine offering: the Boeing 737-300 series onwards (CFM56), the Airbus A340-500 & 600 (Rolls-Royce Trent 500), the Airbus A350 XWB (Rolls-Royce Trent XWB), the Boeing 747-8 (GEnx-2B67), and the Boeing 777-300ER/200LR/F (General Electric GE90).[24] However, Airbus' A380 and Boeing's 787 Dreamliner has two engine types available; the Engine Alliance GP7000 and the Rolls-Royce Trent 900 and The General Electric GEnx and the Rolls-Royce Trent 1000 respectively.

Currency[edit]

Boeing's production costs are mostly in United States dollars, whereas Airbus' production costs are mostly in Euro. When the dollar appreciates against the euro the cost of producing a Boeing aircraft rises relatively to the cost of producing an Airbus aircraft, and conversely when the dollar falls relative to the euro it is an advantage for Boeing. There are also possible currency risks and benefits involved in the way aircraft are sold. Boeing typically prices its aircraft only in dollars, while Airbus, although pricing most aircraft sales in dollars, has been known to be more flexible and has priced some aircraft sales in Asia and the Middle East in multiple currencies. Depending on currency fluctuations between the acceptance of the order and the delivery of the aircraft this can result in an extra profit or extra expense — or, if Airbus has purchased insurance against such fluctuations, an additional cost regardless.[25]

Safety[edit]

Both aircraft manufacturers have good safety records on recently manufactured aircraft. By convention, both companies tend to avoid safety comparisons when selling their aircraft to airlines. Most aircraft dominating the companies' current sales, the Boeing 737-NG and Airbus A320 families and both companies' wide-body offerings, have good safety records. Older model aircraft such as the Boeing 727, the original Boeing 737s and 747s, Airbus A300 and Airbus A310, which were respectively first flown during the 1960s, 1970s, and 1980s, have had higher rates of fatal accidents.[26] According to Airbus' John Leahy, the Boeing 787 Dreamliner battery problems will not cause customers to switch airplane supplier.[27]

Effect of competition on product plans[edit]

The A320 has been selected by 222 operators (Dec. 2008), among these several low-cost operators, gaining ground against the previously well established 737 in this sector; it has also been selected as a replacement for 727s and aging 737s by many full-service airlines such as Star Alliance members United Airlines and Lufthansa. After dominating the very large aircraft market for four decades, the Boeing 747 now faces a challenge from the A380. In response, Boeing now offer the stretched and updated 747-8, with greater capacity, fuel efficiency, and longer range. Frequent delays to the Airbus A380 program caused several customers to consider cancelling their orders in favour of the refreshed 747-8,[28] although none have done so and some have even placed repeat orders for the A380. However, all orders for the A380F freight variant have been cancelled. To date, Boeing has secured orders for 78 747-8F and 51 747-8I aircraft with first deliveries originally scheduled for 2011 and 2012 as the 747-8I is only in service with Lufthansa, while Airbus has orders for 318 A380s, the first of which entered service in 2007 and has delivered a total of 138 to customers (as of July 2014).

Several Boeing projects were pursued and then cancelled, for example the Sonic Cruiser. Boeing's current platform for fleet rejuvenation is the Boeing 787 Dreamliner, which uses technology from the Sonic Cruiser concept. The 787's rapid sales success and pressure from potential customers forced Airbus to revise the design of its competing A350.[citation needed]

Boeing initially ruled out producing a re-engined version of its 737 to compete with the Airbus A320neo family launch planned for 2015, believing airlines would be looking towards the Boeing Y1 and a 30% fuel saving, instead of paying 10% more for fuel efficiency gains of only a few percent. Industry sources believe that the 737's design makes re-engining considerably more expensive for Boeing than it was for the Airbus A320. However, there did prove to be considerable demand. Southwest Airlines, who use the 737 for their entire fleet (680 in service or on order), said they were not prepared to wait 20 years or more for a new 737 model and threatening to convert to Airbus.[29] Boeing eventually bowed to airline pressure and in 2011 approved the 737 MAX project, scheduled for first delivery in 2017.

Orders and deliveries[edit]

Orders
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Airbus 705 1503 833 1419 574 271 777 1341 790 1055 370 284 300 375 520 476 556 460 326 106 125 38 136 101 404 421
Boeing 823 1355 1203 805 530 142 662 1413 1044 1002 272 239 251 314 588 355 606 532 664 379 112 220 230 240 456 563
Sources 2014: Airbus net orders until July 31, 2014 <http://www.airbus.com/company/market/orders-deliveries/>[30]

Boeing net orders until August 5, 2014 <http://active.boeing.com/commercial/orders/index.cfm>

The former McDonnell Douglas MD-95 (as the B717), the MD-80, the MD-90 and the MD-11 are included in Boeing orders since MD's August 1997 merger with Boeing.

Deliveries
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Airbus 352 626 588 534 510 498 483 453 434 378 320 305 303 325 311 294 229 182 126 124 123 138 157 163 95 105
Boeing 400 648 601 477 462 481 375 441 398 290 285 281 381 527 491 620 563 346 219 207 272 330 446 435 385 284
Sources 2013: Airbus deliveries until July 31, 2014 <http://www.airbus.com/company/market/orders-deliveries/>[30]

Boeing deliveries until July 31, 2014 <http://active.boeing.com/commercial/orders/index.cfm?content=displaystandardreport.cfm&optReportType=CurYrDelv>

The former McDonnell Douglas MD-95 (as the B717), the MD-80, the MD-90 and the MD-11 are included in Boeing deliveries since MD's August 1997 merger with Boeing.

The following figure presents the annual orders for and deliveries of aircraft produced by Airbus and Boeing, respectively, since 1989:[31][30][32][33][30][34]

  Airbus orders
  Airbus deliveries
  Boeing orders
  Boeing deliveries


Orders and deliveries by product

Civil airplanes 2013 Deliveries 2013 Orders 2013 Backlog Historical Deliveries *
Airbus Boeing Airbus Boeing Airbus Boeing Airbus Boeing
single aisle 1010 707
single aisle 155 717
single aisle 1831 727
single aisle 493 A320 440 737 1162 A320 1046 737 4298 A320 family 3680 737 5895 A320 7865 737
single aisle 1049 757
widebody 21 767 2 767 49 767 561 A300
255 A310
1061 767
widebody 108 A330 98 777 69 A330 113 777 267 A330 380 777 1046 A330
377 A340
1164 777
widebody 0 A350 65 787 230 A350 182 787 812 A350 916 787 0 A350 114 787
widebody 25 A380 24 747 42 A380 12 747 182 A380 55 747 122 A380 1482 747
Total 626 648 1503 1355 5559 5080 8256 15731
*Historical deliveries are all jet airliners from Boeing since 1958 and Airbus since 1974 until 31 December 2013
Boeing [35] Airbus [36]


Deliveries by year and product (through July 31, 2014)
707 717 727 737 747 757 767 777 787 Boeing[37] A300 A310 A320 A330 A340 A350 A380 Airbus
1974 21 91 55 22 189 4 4
1975 7 91 51 21 170 8 8
1976 9 61 41 27 138 13 13
1977 8 67 25 20 120 15 15
1978 13 118 40 32 203 15 15
1979 6 136 77 67 286 26 26
1980 3 131 92 73 299 39 39
1981 2 94 108 53 257 38 38
1982 8 26 95 26 2 20 177 46 46
1983 8 11 82 22 25 55 203 19 17 36
1984 8 8 67 16 18 29 146 19 29 48
1985 3 115 24 36 25 203 16 26 42
1986 4 141 35 35 27 242 10 19 29
1987 9 161 23 40 37 270 11 21 32
1988 165 24 48 53 290 17 28 16 61
1989 5 146 45 51 37 284 24 23 58 105
1990 4 174 70 77 60 385 19 18 58 95
1991 14 215 64 80 62 435 25 19 119 163
1992 5 218 61 99 63 446 22 24 111 157
1993 152 56 71 51 330 22 22 71 1 22 138
1994 1 121 40 69 41 272 23 2 64 9 25 123
1995 89 25 43 37 13 207 17 2 56 30 19 124
1996 76 26 42 43 32 219 14 2 72 10 28 126
1997 135 39 46 42 59 321 6 2 127 14 33 182
1998 282 53 54 47 74 510 13 1 168 23 24 229
1999 12 320 47 67 44 83 573 8 222 44 20 294
2000 32 282 25 45 44 55 483 8 241 43 19 311
2001 49 299 31 45 40 61 525 11 257 35 22 325
2002 20 223 27 29 35 47 381 9 236 42 16 303
2003 12 173 19 14 24 39 281 8 233 31 33 305
2004 12 202 15 11 9 36 285 12 233 47 28 320
2005 13 212 13 2 10 40 290 9 289 56 24 378
2006 5 302 14 12 65 398 9 339 62 24 434
2007 330 16 12 83 441 6 367 68 11 1 453
2008 290 14 10 61 375 386 72 13 12 483
2009 372 8 13 88 481 402 76 10 10 498
2010 376 12 74 462 401 87 4 18 510
2011 372 9 20 73 3 477 421 87 26 534
2012 415 31 26 83 46 601 455 101 2 30 588
2013 440 24 21 98 65 648 493 108 25 626
2014 278 7 1 58 56 400 276 60 0 16 352
Total 1010 155 1831 8143 1489 1049 1062 1222 170 16131 561 255 6171 1106 377 0 138 8608
707 717 727 737 747 757 767 777 787 A300 A310 A320 A330 A340 A350 A380


Deliveries by decade and fuselage type (through Dec 31, 2013)
Narrow-body Wide-body Boeing[37] Narrow-body Wide-body Airbus Ratio B:A
1980s 1747 624 2371 74 402 476 4.98:1
1990s 2466 1232 3698 1068 563 1631 2.27:1
2000s 2974 966 3940 2983 827 3810 1.03:1
2010s 1603 585 2188 1770 488 2258 1:1.03
Total 11910 3821 15731 5895 2361 8256

The first Airbus delivery was in 1974 and Boeing deliveries considerably exceeded that of Airbus throughout the 1980s. In the 1990s this lead narrowed significantly but Boeing remained ahead of Airbus partly because of Boeing's wider offering of aircraft types (707,737, 757) against Airbus' A320 family. In the 2000s Airbus assumed the lead in narrow-body aircraft despite Boeing still having a wider selection on offer (717, 737, 757). By 2010 little difference remained between Airbus and Boeing in both the wide-body or narrow-body categories or the range on offer.


Aircraft still in operation
707 717 727 737 747 757 767 777 787 Boeing[37] A300 A310 A320 A330 A340 A350 A380 Airbus Ratio B:A
2006 68 155 620 4328 989 996 862 575 8593 408 199 2761 418 306 4092 2.09:1
2007 63 155 561 4583 985 1000 880 640 8867 392 193 3095 481 330 4491 1.97:1
2008 61 154 500 4761 955 980 873 714 8998 387 194 3395 533 330 4 4843 1.86:1
2009 58 142 442 4928 947 970 864 780 9131 376 188 3737 607 345 16 5269 1.73:1
2010 39 147 398 5153 915 945 863 858 9318 348 160 4092 675 342 30 5647 1.65:1
2011 10 130 250 5177 736 898 837 924 8962 296 121 4392 766 332 50 5957 1.50:1
2012 2 143 169 5357 690 860 838 1017 15 9091 262 102 4803 848 312 76 6403 1.42:1
2013 148 109 5458 627 855 821 1094 68 9180 234 84 5170 927 298 106 6819 1.35:1
2014 154 87 5643 581 803 795 1184 163 9410 216 71 5614 1013 265 136 7315 1.29:1
707 717 727 737 747 757 767 777 787 A300 A310 A320 A330 A340 A350 A380
World Airliner Census 2006 [38] World Airliner Census 2007 [39] World Airliner Census 2008 [40] World Airliner Census 2009 [41]
World Airliner Census 2010 [42] World Airliner Census 2011 [43] World Airliner Census 2012 [44] World Airliner Census 2013 [45]
World Airliner Census 2014 [46]

The ratio of Boeing to Airbus still in operation, if projected at the current rates would reach parity, 1:1, in 2021.

Controversies[edit]

The Boeing 787 Dreamliner (above) will compete with the Airbus A330 and the Airbus A350 in the medium to long range market.

Subsidies[edit]

Boeing has continually protested over launch aid in the form of credits to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks.[47]

In July 2004 Harry Stonecipher (then CEO of Boeing) accused Airbus of abusing a 1992 bilateral EU-US agreement regarding large civil aircraft support from governments. Airbus is given reimbursable launch investment (RLI, called "launch aid" by the US) from European governments with the money being paid back with interest, plus indefinite royalties if the aircraft is a commercial success.[48] Airbus contends that this system is fully compliant with the 1992 agreement and WTO rules. The agreement allows up to 33 per cent of the program cost to be met through government loans which are to be fully repaid within 17 years with interest and royalties. These loans are held at a minimum interest rate equal to the cost of government borrowing plus 0.25%, which would be below market rates available to Airbus without government support.[49] Airbus claims that since the signing of the EU-U.S. agreement in 1992, it has repaid European governments more than U.S.$6.7 billion and that this is 40% more than it has received.

Airbus argues that pork barrel military contracts awarded to Boeing (the second largest U.S. defence contractor) are in effect a form of subsidy (see the Boeing KC-767 vs EADS (Airbus) KC-45 military contracting controversy). The significant U.S. government support of technology development via NASA also provides significant support to Boeing, as do the large tax breaks offered to Boeing, which some claim are in violation of the 1992 agreement and WTO rules. In its recent products such as the 787, Boeing has also received substantial support from local and state governments.[50] However, Airbus' parent, EADS, itself is a military contractor, and is paid to develop and build projects such as the Airbus A400M transport and various other military aircraft.[51]

In January 2005, European Union and United States trade representatives Peter Mandelson and Robert Zoellick agreed to talks aimed at resolving the increasing tensions. These talks were not successful, with the dispute becoming more acrimonious rather than approaching a settlement.

World Trade Organization litigation[edit]

"We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues. We have worked together well so far, and intend to continue to do so."

Joint EU-US statement[52]

On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing.[53]

Increased tensions, due to the support for the Airbus A380, escalated toward a potential trade war as the launch of the Airbus A350 neared. Airbus preferred the A350 program to be launched with the help of state loans covering a third of the development costs, although it stated it will launch without these loans if required. The A350 will compete with Boeing's most successful project in recent years, the 787 Dreamliner. EU trade officials questioned the nature of the funding provided by NASA, the Department of Defense, and in particular the form of R&D contracts that benefit Boeing; as well as funding from US states such as Washington, Kansas, and Illinois, for the development and launch of Boeing aircraft, in particular the 787.[54] An interim report of the WTO investigation into the claims made by both sides was made in September 2009.[55]

In September 2009, the New York Times and Wall Street Journal reported that the World Trade Organization would likely rule against Airbus on most, but not all, of Boeing's complaints; the practical effect of this ruling would likely be blunted by the large number of international partners engaged by both plane makers, as well as the expected delay of several years of appeals. For example, 35% of the Boeing 787 Dreamliner is manufactured in Japan. Thus, some experts are advocating a negotiated settlement.[56] In addition, the heavy government subsidies offered to automobile manufacturers in the United States have changed the political environment; the subsidies offered to Chrysler and General Motors dwarf the amounts involved in the Airbus-Boeing dispute.[57]

In March 2010, the WTO ruled that European governments unfairly financed Airbus.[58] In September 2010, a preliminary report of the WTO found unfair Boeing payments broke WTO rules and should be withdrawn.[59] In two separate findings issued in May 2011, the WTO found, firstly, that the US defence budget and NASA research grants could not be used as vehicles to subsidise the civilian aerospace industry and that Boeing must repay $5.3 billion of illegal subsidies.[60] Secondly, the WTO Appellate Body partly overturned an earlier ruling that European Government launch aid constituted unfair subsidy, agreeing with the point of principle that the support was not aimed at boosting exports and some forms of public-private partnership could continue. Part of the $18bn in low interest loans received would have to be repaid eventually; however, there was no immediate need for it to be repaid and the exact value to be repaid would be set at a future date.[61] Both parties claimed victory in what was the world's largest trade dispute.[62][63][64]

On 1 December 2011 Airbus reported that it had fulfilled its obligations under the WTO findings and called upon Boeing to do likewise in the coming year.[65] The United States did not agree and had already begun complaint procedures prior to December, stating the EU had failed to comply with the DSB's recommendations and rulings, and requesting authorisation by the DSB to take countermeasures under Article 22 of the DSU and Article 7.9 of the SCM Agreement. The European Union requested the matter be referred to arbitration under Article 22.6 of the DSU. The DSB agreed that the matter raised by the European Union in its statement at that meeting be referred to arbitration as required by Article 22.6 of the DSU however on 19 January 2012 the US and EU jointly agreed to withdraw their request for arbitration.[66]

On 12 March 2012 the appellate body of the WTO released its findings confirming the illegality of subsidies to Boeing whilst confirming the legality of repayable loans made to Airbus. The WTO stated that Boeing had received at least $5.3 billion in illegal cash subsidies at an estimated cost to Airbus of $45 billion. A further $2 billion in state and local subsidies that Boeing is set to receive have also been declared illegal. Boeing and the US government were given six months to change the way government support for Boeing is handled.[67] At the DSB meeting on 13 April 2012, the United States informed the DSB that it intended to implement the DSB recommendations and rulings in a manner that respects its WTO obligations and within the time-frame established in Article 7.9 of the SCM Agreement. The European Union welcomed the US intention and noted that the 6-month period stipulated in Article 7.9 of the SCM Agreement would expire on 23 September 2012. On 24 April 2012, the European Union and the United States informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU and Article 7 of the SCM Agreement.[68]

On 25 September 2012 the EU requested discussions with the USA, because of the non compliance of the US and Boeing with the WTO ruling of 12 March 2012. On 27 September 2012 the EU requested the WTO to approve EU countermeasures against USA's subsidy of Boeing. If the WTO approves and the discussions between the EU and USA fail, the EU wants permission to place trade sanctions of up to 12 billion US$ annually against the USA. The EU believes this amount represents the damage the illegal subsidies of Boeing cause to the EU.[69][70]

See also[edit]

References[edit]

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Bibliography

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