Airbus CEO warns of aviation trade war danger

Guillaume Faury insist on a settlement between US and Europe

Airbus CEO Guillaume Faury

An escalating battle over aircraft subsidies between the US and the European Union threatens to damage both sides, said Airbus SE Chief Executive Officer Guillaume Faury. He will thus continue to advocate for a settlement between the two sides before the imposition of tariffs becomes a "lose-lose game" for both of them.

“A trade war on aviation would be a lose-lose game because the supply chains are very integrated,” Faury told reporters Thursday at a briefing in Montreal. “We buy a lot in the US we sell in the US and we are a US player as well.”

Airbus is at the center of an EU-US feud, after the World Trade Organization (WTO) has found that the company and its US rival Boeing received billions of dollars of subsidies in a pair of cases marking the world’s largest-ever corporate trade dispute. The WTO now is poised to authorise Washington to impose tariffs on almost $11.2bn of European goods due to illegal state aid provided to the planemaker. The US duties, which could hit as soon as October, will target jetliners and aircraft parts from Airbus host nations - Britain, France, Germany and Spain - as well as luxury products such as wine and leather goods, according to the US Trade Representative’s office. The full scope of the tariffs is expected to be released in the week starting on 30 September.

Airlines for America, a trade group representing US carriers, said numerous times that such tariffs on jetliners and aircraft parts would hurt the aviation industry and the broader economy. Faury echoed that view, saying the imposition of tariffs “will increase prices, it will have an impact on the cost of travel.”

Airbus says it sources about 40% of plane parts from the US across its model range and regardless of where aircraft are assembled. That makes it the single biggest customer for the American aerospace industry and helps support 275,000 jobs across 40 states, according to the company. The planemaker’s purchases from US manufacturers will help keep down its exposure to the looming tariffs, as may moves to attract more suppliers to the Mobile area.

At the same time, jets produced at the site are constructed from large sub-assemblies sent by ship from Europe, with the A320’s fuselage coming from France and Germany, its wings from Britain and the tail from Spain. That means simply boosting its final assembly line in Mobile, Alabama won’t provide much of a workaround.

Thus, Faury said Airbus would continued to push for a negotiated settlement between the US and the EU.

“We think it’s still possible,” he said.

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