A senior US trade official said Germany should be careful about intervening to help aerospace firm EADS and should allow any stakes in Airbus’s troubled parent company to be sold on the open market.
“The point is just be careful about intervening in markets,” Franklin Lavin, US undersecretary of commerce for international trade, said in an interview on Tuesday.
“There’s very little track record of a country or business being better because of a market intervention. You’re distorting the market,” he said.
The United States and the European Union have traded allegations about unfair state subsidies to Airbus, and to its US rival Boeing, for years.
If German carmaker DaimlerChrysler follows through on plans to sell shares in EADS, this should be an open sale and not be limited to strategic German investors as the government wants, Lavin said.
“My view is that it should be an open-market transaction. Part of the problem is the stakeholders are all strategic stakeholders, so they have a set of goals beyond normal commercial goals,” he said during an official visit in which he discussed EADS and other issues with German officials.
Core EADS shareholder DaimlerChrysler, which is in the process of reducing its stake from around 30% to 22.5%, has signaled it might sell another 7.5%.
Germany is worried a Daimler stake sale could upset the shareholding balance that has existed with France since Europe’s largest aerospace and defence company was formed in 2000 following a merger of the two countries’ top aerospace firms.
Lavin said it was clear the government could not stand idly by, but that direct intervention was not the best strategy.
“I tell my German friends when Chrysler got in trouble, we provided loan guarantees. And then they got in trouble a second time, and we sold to Daimler. I’m not sure the loan guarantees ever really addressed the underlying problem,” he said.
Germany fears that its influence within EADS could diminish if Daimler shares are bought by non-German investors.
It has signaled a readiness to buy the stake itself through state development bank KfW, possibly in combination with several German states.
German Economy Minister Michael Glos has publicly criticized the idea of a state intervention in EADS and would prefer that Daimler either hold onto its 22.5% stake, or if it insists on selling an additional 7.5%, that it go to a consortium of private investors.
However, he appeared to backtrack slightly in comments on Germany’s n24 television, saying he could imagine a compromise under which a group of private and public investors joined together in what he called a “mixed solution”.
On Oct. 16, the German government said it wanted to quickly clarify how the delicate Franco-German balance at EADS would be preserved. (Reuters)