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What Does It Cost To Keep Airbus Aloft?


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WHAT DOES IT COST TO KEEP AIRBUS ALOFT?

Depending on whom you listen to, Airbus Industrie is either an amazing success story or a bottomless pit for the marks, francs, pounds, and pesetas of European taxpayers. As usual, the truth is somewhere in between. Airbus acts as the marketing arm for aircraft assembled from components made by state-backed German, French, British, and Spanish manufacturers (page 48). Founded two decades ago, Airbus has carved out a 30% share of world orders, and its 1,600-plane order backlog is worth $70 billion. On the other hand, the bills that the four state owners submit to Airbus are so--shall we say--laissez-faire that no one has a clue what real costs are.

The dearth of facts has driven fair-trade sleuths from the U. S. Commerce Dept. and the Office of the U. S. Trade Representative up the wall. So have $13.5 billion in government developmental loans that Washington sees as unfair advantages for Airbus in competition against Boeing and McDonnell Douglas. Yet the table-thumping from Washington is much stronger than the throat-clearing from Seattle and St. Louis. Boeing and McDonnell Douglas don't want to jeopardize sales to state-owned Lufthansa and Air France.

But while trade negotiators and what one Airbus executive calls "small-minded pencil-pushers" argue over subsidies, there can be no doubt that Airbus has already wrought a revolution in the aircraft industry. The European owner-states are proud that they have been able to jointly succeed where they had failed separately, and the Airbus example will probably have its imitators in other industries requiring huge scientific, technical, and financial resources.

In making allegations of subsidies, Washington should remember its hands aren't clean: It bailed out both Lockheed and Chrysler and expends billions on military contracts that benefit the U. S. industry. After years of U. S. prodding, Airbus has offered to cut government loans to develop planes from the 75% of the past to 45% of total costs. Washington is holding out for 25%. Maybe the European offer isn't so bad. However, the U. S. is right to press Airbus to disclose the exact cost of the subsidies and funding arrangements that have been provided. Only then can the true stockholders--European taxpayers--decide whether their investment is such a good idea.


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