As reported by the Seattle Times and the Wall Street Journal yesterday, Airbus has finally chosen a new CEO.  Unlike every other chief executive officer of the company, Gustav Humbert, the company’s previous chief operations officer, is German.  Historically, the company has always had French leaders.  The French are apparently so upset that they are refusing to announce the decision before next week’s French referendum on the European constitution.  As you may know by now, the French are not happy about that either.

Airbus is 80% owned by European Aeronautic Defense and Space (EADS).  EADS, as you may not know is 15% owned by the French Government, 15% owned by France’s Lagardere group, and a full 30% is controlled by Germany’s DaimlerChrysler. 

It remains to be seen how Gustav Humbert will handle the U.S. opposition to government subsidies delivered to Airbus to facilitate the launch of the new A380 commercial airplane, among others. 

Boeing and the U.S. government are opposed to the subsidies paid to Airbus by the EU, and correctly identify the actions as anti-competitive.  In short, the European government gives taxpayer money to Airbus to help build, launch, and sell airplanes.  In America, such a thought would be immediately rejected.  Airbus’ largest competitor, Boeing, must generate its own funding for such ventures and is actively pursuing an end to European subsidies for Airbus that provide it with an unfair advantage.

As a side note, I should make it clear that the subsidies are not 100% funded by European taxpayers.  The EU has been actively pursuing money from at least one American corporation for years.  The largest grab for US dollars came as a legal fine imposed upon Microsoft for the same case that the U.S. government previously resolved.  As reported by MSNBC,

EU antitrust regulators fined Microsoft a record 497 million euros ($624 million) when they ruled in March last year that the company abusively wielded its Windows software domination to lock competitors out of the market.

As stated by Boeing, the U.S. Trade Representative has decided to seek a WTO dispute resolution panel:

"Boeing strongly supports the U.S. Trade Representative's decision to seek a WTO dispute resolution panel in the U.S. government's effort to end the dispute over launch aid to Airbus. We agree with USTR that a negotiated settlement is preferable and hope serious U.S.-EU discussions will continue as litigation proceeds. Boeing stands ready to support USTR in any way necessary to bring a prompt end to market-distorting subsidies to Airbus."

As the global economy matures, businesses throughout the world should reject socialistic and communistic government-owned and funded business strategies.  It is no mystery that true capitalism is a superior economic platform that has historically outperformed all other efforts to maintain stable economies.  Airbus should compete on its own merits, and if it is unable, it should wither as any unprofitable business does.  Or perhaps, it could borrow money like every other business.  The EU’s subsidy program reeks of the same anti-competitive behavior they have accused and fined Microsoft for committing.  Oddly, this type of Hypocrisy is not the driving force behind the French opposition to the new constitution.

W.S.

Note:  In the interest of full transparency, William Squire maintains an ongoing relationship with the Boeing Company.