Boeing and Airbus Elevate WTO Subsidies Dispute

The tit-for-tat battle between Boeing and Airbus continues as both air complaints with the WTO regarding receipt of illegal subsidies. The U.S. claims Airbus has received as much as $100 billion in illegal government aid, while the EU cites $24b of illegal aid received by Boeing. Naturally, both sides are dismissing the respective claims. The WTO is expected to issue a preliminary ruling on the U.S. suit against Airbus in September. There will be a hearing for the EU's suit against Boeing in July, with a decision not seen coming until 2008. A U.S. representative argued, "Launch aid has enabled Airbus to launch a series of large commercial aircraft models at a scale and a pace that would have been impossible without subsidies." The BBC notes EU officials call the $100b figure a "smoke screen." The U.S. is seeking an immediate return of $4.5b if it wins the case. EU officials argue Airbus' aid must be repaid, unlike Boeing's.

Sources: Associated Press, BBC, Reuters [I, II]
Commentary: Bearish Analysts Expect Boeing Shares To Rally, Leave Targets Below Current Price • China to Build State Owned Competition for Boeing, Airbus • Boeing Capitalizes on Global Defense
Stocks/ETFs to watch: Boeing (BA), EADS (Paris: 005730). Competitors: Lockheed Martin (LMT), Northrop Grumman (NOC), General Dynamics (GD). ETFs: iShares Dow Jones US Aerospace & Defense (ITA), PowerShares Aerospace & Defense (PPA)

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