EU may challenge $8.7B in U.S. tax breaks in Boeing-Airbus trade dispute

Nearly $8.7B in U.S. tax breaks that encouraged Boeing (BA -0.6%) to keep production of the 777x jet in Washington state could be challenged by the EU, potentially opening a new phase in the formal trade dispute over aircraft industry aid, Reuters reports.

The package exceeds the estimated cost of developing the 777X, suggesting Boeing is getting an aircraft "fully funded by the U.S. taxpayer," an Airbus (EADSF, EADSY) spokesperson says.

Meanwhile, Boeing prepares for next week's investor meeting; although the conference hasn’t driven material stock performance in the last two years, Citigroup thinks relatively low expectations could provide some upside potential, as the firm expects BA to reiterate targets supporting a bullish view.

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Comments (3)
  • corky smith
    , contributor
    Comments (69) | Send Message
    Maybe we should listen to these euro cry babies.......I mean......they wrote the book on subsidizing a business . Every business person in the world knows airbutt would not exist if not for massive euro government subsidies. Just think about USA company is taking on the entire euro continent....and winning !!!
    In any case, I just can't take serious a ceo named Fabrice Bregier ...sounds like a feminine freshness product.
    16 May 2014, 09:21 PM Reply Like
  • corky smith
    , contributor
    Comments (69) | Send Message
    I guess we should listen to these euro cry babies....they wrote the book on subsidizing a business
    16 May 2014, 09:22 PM Reply Like
  • Karadion
    , contributor
    Comments (21) | Send Message
    What's amusing is that the Airbus spokesperson is badly misinformed about what the tax break is used for. The 777X is really the extension of the 7E7 tax break which went from 2004 to 2024 until they decided to extend it by another 16 years in Washington State. So the reality is that the tax break covers both the 787 and the 777X so there's no way that the 777X R&D including other cost can be covered by the tax incentive. R&D is going to be more than 5 billion which will take years to pay off. So it would take at least 14 years for the tax break to cover the cost of the program. Boeing still will be paying taxes to the State of Washington at a B&O tax rate of 0.2904% instead of 0.484% (which is a 40% drop). So a 777X plane that sells to a customer for $350 million, Washington State gets around $1 million instead of $1.69 million from Boeing.


    Contrast this to Airbus getting a full check from the German & French governments to pay for the A380 & A350XWB programs including other programs like the A320neo. The total amount of those big fat checks? Over $15 billion that Airbus used to fund the cost of both the A380 and A350XWB programs. Their goal? To kill Boeing and make Airbus the sole manufacturer of airplanes.
    17 May 2014, 10:03 AM Reply Like
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