EADS, Airbus’ parent company, begging for more state support

Yes of course, competition is fierce, the process of designing new aircraft and producing them carries along lots of risks, but does this justify even further state support?

EADS’ CEO Louis Gallois complains that Boeing received 800 million dollars of subsidies from the U.S. government while Airbus received only $94 million from the European governments in 2006.

Well, it is an established bad habit amongst governments from around the world to support “their” aircraft manufacturer with extensive state subsidies. To some extent, this practice is justified as it takes a lot of effort and money to build up a new aircraft manufacturer.  Besides, the entrepreneurs would be overburdened with having to bear the entire risk in the beginning. Moreover, it would be unfair if one manufacturer would not receive state support and all competitors could rely on financial support by their governments. But the question arises whether state subsidies in this extent are still justified in the case of Boeing and Airbus which dominate the aircraft industry which anyway has full order books for years as a result of the aviation boom. Governments should consider whether they are planning to pay forever for their aircraft industry. If not, is there any better moment to cut subsidies than now? Furthermore, the U.S. and the EU could ultimately end their decades-old dispute over billions of subsidies to Airbus and Boeing. The companies would have to learn to stand on their own feet and less influence by the government would make it easier for the executives to make the processes efficient and economic. Anyway, I ask myself how Airbus can be efficient and competitive with producing the components of its planes all about Europe and then shipping them to Toulouse, France, for the final assembly. This structure of production is a waste of both, money and time and derives from the idea that Airbus is a European aircraft manufacturer with subsidiaries in all countries involved. The political influence at Airbus does by far more harm than good and hinders a real reorganization of the company.

Another issue is whether the taxpayers should spend billions of dollars to boost the profits of the companies or to reduce their debt if they screw up a major project.


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