PARIS, June 16 — The European Union and the United States have agreed to extend their truce in the long-running dispute between rival aircraft manufacturers Airbus and Boeing over mutual accusations of illegal subsidies.
Here are five things to know about the two industry giants.
An all-powerful duopoly
The two companies are such significant players in the industry that between them they hold 90 per cent of the market for commercial airliners. Their exports are so large they feature in the foreign trade figures for their host countries.
Boeing, founded in 1916, had major success from the 1960s on with its medium-haul 737 and long-haul 747 airliners.
And as it expanded, it absorbed major rivals including McDonnell-Douglas.
Today however, it is looking to reduce its workforce to 130,000 by the end of 2021 from 161,000 before the pandemic hit air travel. It has factories in Washington State and in South Carolina.
Airbus, in contrast, has operations in several European Union countries and around the world, including in the United States, in Mobile, Alabama.
Set up in 1970 as a Franco-German venture with the launch of the A300, one of its most popular airliners is the A320, a direct rival to Boeing’s 737.
At the end of 2019, Airbus had 135,000 employees spread across the world. But it too has cut back in response to damage done by the coronavirus crisis, shedding 15,000 jobs.
As well as its home bases in Toulouse, France and Hamburg, Germany, Airbus’s network of production facilities extends to Britain, Canada, China and Spain.
Hit hard by the pandemic
The coronavirus crisis has been a major blow to airlines who are the two giants’ main clients, forcing both manufacturers to cut back on deliveries.
Airbus delivered only 566 aircraft in 2020, a third less than the previous year. Boeing delivered just 157, down from 380 in 2019. It is still dealing with the fallout from the 20-month grounding of its 737 MAX after two fatal crashes.
As a result, the two giants sales have fallen sharply: down by 29 per cent for Airbus to €49.9 billion (RM249.2 billion); down by 24 per cent for Boeing to US$58.2 billion.
Satellites, fighters and helicopters
Both companies have expanded into military aircraft and aerospace.
Airbus is the world’s top helicopter manufacturer, with 12 per cent of the market. It also makes military transport planes and the Eurofighter.
Its defence and aerospace activities account for 21 per cent of its turnover and it is the world’s 13th-largest arms manufacturer.
Boeing comes second on the same list.
Its products list includes cargo and fighter jets such as the C17, F15 and F18, Apache helicopters and Osprey tiltrotor aircraft, and a broad range of missiles, satellites and space launchers.
The military side of its operations accounted for half of all sales last year.
Contrasting fortunes
Once the shock of the pandemic is behind the two giants, Airbus seems better placed for the recovery in the market.
At the end of May it had 6,933 orders, against Boeing’s 4,983.
Airbus is also due to launch its A321 XLR in two years, an aircraft able to cover the kind of routes hitherto only managed by big long-haul carriers.
The new plane has already had a very positive response from clients.
Boeing, which does not have an equivalent plane, is still suffering fall-out from the grounding of its 737 MAX, and must sell aircraft it has already produced before it can increase its production rates.
Adding to its problems are the suspension of deliveries of its long-haul 787 because of manufacturing problems, and a delay of a year — to the end of 2023 — in the first deliveries of its new 777X because of low demand.
Longstanding trade dispute
Airbus and Boeing, with the European Union and United States respectively backing them, have been engaged in a bitter trade dispute at the World Trade Organisation that dates back to 2004.
The dispute centres around public subsidies paid to both companies, which each side accusing the other of engaging in anti-competitive, illegal practices.
With both companies weakened by the pandemic, the two sides have agreed to a truce, suspending punitive tariffs for five years, with the blessing of the WTO.
During Donald Trump’s presidency, Washington imposed taxes of up to US$7.5 billion, targeting European aircraft in particular.
The European Union meanwhile slapped customs tariffs of US$4 billion on US exports. — AFP
