The World Trade Organization ruled Thursday that Boeing Co (NYSE:BA) has received about $2.7 billion in illegal subsidies from the federal government over the last several decades.
The ruling is a huge win for the American aerospace giant, and a blow to its archrival EADS, the parent company of Airbus.
J. Michael Luttig, Boeing executive vice president and general counsel, said, "This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing. The ruling rejects 80 percent of the EU's claims against the U.S., finding no more than $2.7 billion of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6 billion in NASA R&D funding, which is but a small fraction of the total amount challenged."
Last June, the WTO upheld about 80% of a similar U.S. claim, finding Airbus had received more than $20 billion in illegal government subsidies, which harmed the U.S. aerospace industry and resulted in the loss of billions of dollars in exports and tens of thousands of American jobs.
Luttig continued, "Comparing today's decision with the decision last June reveals a market distorted by Airbus' practices, with illegal launch aid being the key discriminator. The WTO ruling on launch aid goes to the heart of the Airbus business model, which now must change. In contrast, there are no comparable findings or consequences to the U.S. or Boeing from today's decision, as the WTO has now fully and finally rejected most of the EU's claims."
Both sides may appeal the ruling, and Boeing has stated it will support whatever steps the U.S. government deems necessary to fulfill its WTO obligations once a final ruling is handed down. It expects the same commitment from Airbus and its respective sponsor governments.