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2014 Media Kit
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EasyJet plane order rekindles Airbus-Boeing subsidy row

By: | at 08:00 PM | Channel(s): International Trade  

An order for more than 100 Airbus passenger jets by UK low-cost carrier easyJet has re-ignited a long-running trade spat between the European planemaker and U.S. rival Boeing.

EasyJet announced the $10 billion order for 100 A320neo medium-haul jets, together with 35 current-generation A320 aircraft worth $3 billion at list prices, on Tuesday, day two of the Paris Airshow.

EasyJet began operation in 1995 with Boeing aircraft, but shifted to Airbus in 2002 with a 120-plane order that followed a bitter competition between the world’s largest planemakers.

That 2002 deal later became part of the world’s largest trade dispute, with the United States and the European Union accusing each other of helping their planemakers with unfair subsidies.

“Airbus’ original capture of easyJet as a customer was a key part of the U.S. complaint in the World Trade Organization about the massive harm that illegal government subsidies to Airbus has caused Boeing,” Boeing spokesman Charlie Miller told Reuters by email on Tuesday.

“Airbus’ recent sales to easyJet are a continuation of the harm that resulted from Airbus having been able to ‘flip’ EasyJet as a customer. This is another vivid reminder as to why the EU must finally put an end to market-distorting launch aid.”

Airbus hit back with a salvo against Boeing’s 787 Dreamliner, on the day the U.S. company announced a new, larger version of the jet.
“This is an insult to (easyJet’s) rigorous evaluation that clearly saw the A320neo winning,” Airbus spokeswoman Maggie Bergsma said, referring to Boeing’s comments.

“If we were to apply the Boeing logic on the WTO rulings, the 787 would not exist if not for subsidies.”

The argument is not purely historical. The two sides are at odds over whether Airbus must forego loans by European governments for its newest jet, the A350, which made a maiden flight on Friday and could fly over the show on Friday.

The WTO has ruled in a pair of related cases that European governments unfairly supported Airbus with government loans and that Boeing benefited unfairly from U.S. research grants and other forms of aid.

U.S. officials say the EU could face sanctions next year, but analysts say the dispute could grind on for years.

EasyJet Chief Executive Carolyn McCall said Airbus and Boeing competed hard for the airline’s latest order.

“Ultimately, Airbus offered us the best deal, and at a price with a greater discount to the list price” than the 2002 deal, she said.

The latest deal also rekindled tensions between easyJet and its largest shareholder, who opposed it. Stelios Haji-Ioannou believes the money would be better spent on improving returns to investors. (Reuters)