Airbus CEO urges trade war ceasefire over subsidies

The head of European planemaker Airbus called on Saturday for a “ceasefire” in a transatlantic trade war over aircraft subsidies, saying tit-for-tat tariffs on planes and other goods had aggravated damage from the COVID-19 crisis.

Washington progressively imposed import duties of 15% on Airbus jets from 2019 after a prolonged dispute at the World Trade organisation, and the EU responded with matching tariffs on Boeing jets a year later. Wine, whisky and other goods are also affected.

“This dispute, which is now an old dispute, has put us in a lose-lose situation,” Airbus Chief Executive Guillaume Faury said in a radio interview.

“We have ended up in a situation where wisdom would normally dictate that we have a ceasefire and resolve this conflict,” he told France Inter.

Boeing was not immediately available for comment.

Brazil, which has waged separate battles with Canada over subsidies for smaller regional jets, on Thursday dropped its own complaint against Ottawa and called for a global peace deal between producing nations on support for aerospace.

Faury said the dispute with Boeing was particularly damaging during the COVID-19 pandemic, which has badly hit air travel and led to travel restrictions or border closures. He expressed particular concern about widening bans within Europe.

“We are extremely frustrated by the barriers that restrict personal movement and it is almost impossible today to travel in Europe by plane, even domestically,” he said.

“The priority no. 1 for countries in general is to reopen frontiers and allow people to travel on the basis of tests and then eventually vaccinations.” The comments come as businesses increase pressure on governments to reopen economies as coronavirus vaccine roll-outs gather pace across Europe. France has defended recently introduced border restrictions, saying they will help the government avoid a new lockdown and stay in force until at least the end of February.

Germany installed border controls with the Czech Republic and Austria last Sunday, drawing protest from Austria and concerns about supply-chain disruptions.

Berlin calls the move a temporary measure of last resort.

Poland said on Saturday it had not ruled out imposing restrictions at the country’s borders with Slovakia and the Czech Republic due to rising COVID-19 cases.

Airbus lost $1.3 billion last year amid an unprecedented global slump in air travel because of the pandemic, but expects to deliver hundreds of planes and make a profit in 2021 despite uncertainty about when people will resume flying en masse.

Airbus is also pushing to negotiate a “cease-fire” soon in its years-long trade dispute with US rival Boeing, amid hopes that the Biden Administration will be more amenable than Trump’s government to a deal. The dispute has led to billions of dollars in tit-for-tat cross-Atlantic tariffs on planes, cheese, wine, video games and other products. Airbus CEO Guillaume Faury acknowledged recently that the company’s performance last year was “far from expectations” and had to constantly adapt as airlines grounded planes - or folded altogether - because of travel restrictions. Airbus announced in June that it would cut 15,000 jobs, mostly in France and Germany. “The crisis is not over. It is likely to continue to be our reality throughout the year,” Faury said. “Airlines will continue to suffer” and to “burn cash,” he warned.

Airbus doesn’t expect the industry to recover to pre-pandemic levels until 2023-2025, and when it does, Airbus predicts that environmental concerns will be ever more important to passengers and airlines, so it’s increasing investment in hydrogen and lower-emissions aircraft. Airbus sales were down to 49.9 billion euros from 70 billion euros the year before. The company also reported a loss in 2019 because of a major multinational corruption settlement.

Airbus delivered 566 aircraft last year and expects to deliver about the same number this year, the company said. It took in 268 commercial plane orders, down from 768 the year before. Both figures were well down from normal recent years, but above those from struggling Boeing. Boeing Co. got a bump in orders and deliveries of new planes in December, but it wasn’t enough to salvage the year. It notably suffered from continuing cancellations of its 737 Max jet, which was grounded for 21 months after crashes in Indonesia and Ethiopia killed 346 people. With both plane makers facing a long and difficult recovery, the Airbus chief executive called the US-EU tariffs a “lose-lose situation” for everyone. The tariffs stem from a dispute over state subsidies to both Airbus and Boeing that each side calls unfair.