Airbus alleges US interference in $22bn Boeing deal

Lobbying is "economic distortion" of market: Airbus

Europe's Airbus accused the White House of derailing open competition by helping Boeing Co win a record aircraft deal in Indonesia as details emerged of a behind-the-scenes struggle over jobs and airplane sales worth almost $22 billion.
 
The European planemaker's sales chief said lobbying over the deal on behalf of President Barack Obama had demonstrated double standards on free-market competition amid an ongoing row between Washington and Europe over aircraft subsidies.
 
"There's only one superpower in the world and I think we know it isn't France; it is probably represented by President Obama," John Leahy said at a market briefing in Washington on Thursday.
 
"When he starts making headlines that he is selling airplanes and how that wouldn't happen without his personal involvement, we are seeing economic distortion and we shouldn't be talking about free and open level playing fields for trade around the world if the U.S. pulls stuff like that."
 
Last month, Obama showcased an order for 230 jets from Indonesian budget carrier Lion Air worth $21.7 billion at list prices, the largest commercial deal in Boeing's history.
 
That came months after Airbus, a subsidiary of EADS , pulled off a dramatic coup by landing its own largest order in volume terms for 260 aircraft from American Airlines, toppling an exclusive Boeing customer.
 
The move prompted Boeing to alter its strategy and match Airbus by refreshing its most-sold 737 model with new engines.
 
Attending the Lion Air signing ceremony during a nine-day Pacific tour in mid-November, Obama called the deal a "win-win" for U.S. workers and Asian consumers and said his administration and the Ex-Im bank played a key role in facilitating the sale.
 
The White House said it would support 110,000 industrial U.S. jobs, addressing a key issue in next year's elections.
 
Analysts say a deal between Lion Air and Airbus would have been a surprise since it has an all-Boeing fleet and Europe's jetmaker has previously tried and failed to win its business.
 
But lifting the lid on secretive yet fruitless negotiations to invade Boeing's turf a second time, Leahy said Airbus might have won a deal if it had not been for political intervention.
 
"The CEO and owner of that airline, who has bought nothing but Boeing airplanes, actually came to see me in Toulouse twice to talk about buying the airplanes and in the end told me he had no choice," Leahy said.
 
"I am not sure what 'has no choice' means, but there seems to have been an awful lot of political interference and I think the White House is very proud of that, taking credit for it, saying it would not have happened without White House intervention. Well, that is probably true, but it doesn't really speak well for freedom of competition and free trade."
 
There was no immediate comment from the White House. A Boeing spokesman said it never commented on such negotiations.
 
News of the Lion Air deal angered Airbus, which thought it had pulled off another dramatic coup against Boeing, though analysts do not expect too many defections between rival camps.
 
A person with direct knowledge of the talks said Airbus had progressed as far as reaching a provisional deal known as a memorandum of understanding with Lion Air, which although non-binding, usually signals an end to the competition.
 
Lion Air declined comment, but denied bowing to pressure.
 
"I do not wish to comment on that issue, but all I can say is we did the purchase purely on a commercial basis and we have our independence in doing so," spokesman Edward Sirait said.
 
 
CUT-THROAT COMPETITION
 
Cut-throat competition and diplomatic pressure have defined aerospace for decades as aircraft makers chase business estimated to be worth trillions of dollars over 20 years, shoring up trade balances and protecting high-tech jobs.
 
Leaked cables published by Wikileaks described lobbying on both sides and selling is seen as a growing part of diplomacy.
 
As part of the U.S. National Export Initiative, U.S. officials have said that Cabinet officials and even Obama himself would take time to make a commercial sales pitch when travelling overseas in response to what they see as high-level advocacy from other countries such as Germany and France.
 
French President Nicolas Sarkozy regularly beats the drum for France-based Airbus, as did his predecessor Jacques Chirac, whom newspapers nicknamed the "travelling salesman of France."
 
Boeing and Airbus compete for aircraft sales worth about $80 billion annually, but the stakes have rarely been higher as airlines scramble for revamped short-haul jets to lock in fuel savings, leading to a series of blockbuster orders this year.
 
Each side also accuses the other of benefiting from unfair government subsidies. The European Union said on Thursday it had met a deadline for complying with a World Trade Organization ruling against European government subsidies for Airbus and called on Boeing to rectify its own government aid.
 

Neither side in the world's largest trade dispute disclosed the steps taken by the EU, but some trade experts doubted they would succeed in putting an end to the long-running spat between Airbus and Boeing. 

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