Boeing backs rival in EU row, stands firm on WTO


Boeing threw its weight behind Airbus in a dispute over European Union airline emissions even as it refused to negotiate a settlement in a separate dispute with its arch-rival over aircraft subsidies.

The chief executive of Boeing Commercial Airplanes (BA.N) joined a chorus of criticism of the EU’s Emissions Trading Scheme that will charge airlines for emissions, something Brussels believes necessary to help defeat climate change.
“This is not about Boeing and Airbus; it is about what is best for our customers and how we are going to get the whole industry to reduce its environmental footprint,” Jim Albaugh told Reuters.
“I don’t think the European ETS approach is the right one. We need to have a standstill on this and work with (UN aviation agency) ICAO and get some international rules in place that everyone can sign up to, and ones that will drive us to make the investments we need to improve the efficiency of airplanes.”

Albaugh was speaking after the aviation industry, meeting in Geneva, urged governments to use the UN body to negotiate a global deal on the controversial issue of aircraft emissions.

Nations such as China, India and the United States are unhappy that the EU went ahead with a scheme that applies to their airspace, while the EU says it was forced to act after years of international inaction on air travel pollution.

Airbus and other companies last week appealed to European leaders to delay the scheme, which it says has disrupted Chinese government approval of dozens of valuable aircraft orders.

Making a rare joint appearance with Albaugh, his chief rival, Airbus Chief Executive Tom Enders earlier told the Geneva conference he was “not amused” about the delays and urged the European Commission to freeze the scheme pending a wider deal.
“Give ICAO time to come up with a global regime. Stop it now, don’t go down the road of a trade war,” Enders said.

The senior European official in charge of the scheme has said the EU will stand by its law unless the UN’s International Civil Aviation Organization can come up with a global plan.

Asked about reported comments by a Chinese official denying that Beijing had intervened to halt aircraft orders, Enders said, “there are more subtle ways to do it and as we all know aircraft purchases need Chinese government approval”.

Airbus and Boeing compete for jet orders worth almost $100 billion a year but co-operate on some issues and signed a deal together with Brazil’s Embraer (EMBR3.SA) to study biofuel – an issue on which Enders said the EU Commission had performed well.


Albaugh said Boeing had not benefited from any rift between China and Airbus, but that Boeing expected to sell a “pretty significant number” of 737 MAX and some 777s and 747s to China.

He said aviation had curbed emissions by 70 percent over 40 years and questioned its treatment compared to industries like construction and cement.
“They get a bunch of carbon credits … They can reduce their emissions and then sell their credits, and so they are almost getting rewarded for the fact they haven’t done much.”

Albaugh meanwhile rebuffed European suggestions that host governments of Airbus (EAD.PA) and Boeing should negotiate a settlement to the world’s largest trade dispute, an 8-year-old spat at the World Trade Organization over aircraft subsidies.
“I am not sure we are interested in negotiating a settlement, what we are interested in is all parties playing by the same WTO rules,” he said.

The WTO has found that both Airbus and Boeing benefited from billions of dollars of subsidies.

The WTO is expected on Friday to adopt a finding that Boeing gained unfair support mainly from space agency NASA. Washington is expected to move soon to force the EU to comply with an earlier ruling against unfair European loans to Airbus.

Analysts say the bitter dispute may spill into years of wrangling over compliance before it is finally resolved.
“If there are things we need to do differently we will, and we expect that Airbus will do the same thing,” Albaugh said.

In yet another trade issue dogging the aerospace industry, Albaugh rejected criticism by some U.S. politicians of guarantees provided by the U.S. ExIm bank to smooth jet sales and predicted Congress would renew their funding within weeks.

Senate Republicans on Tuesday blocked efforts to force a vote on renewing the U.S. Export-Import Bank’s charter for four more years. The Obama administration says the bank’s export financing activities, of which aerospace is one part, are needed to level the playing field with other exporters.