Airbus rubs salt in the wound

Sept. 4, 2003
Airbus, the European producer of airliners that competes with Boeing, wants to begin selling aircraft to the Pentagon, according to a newspaper report.

-by Ronald Kohl, Editor

It astounds me that the company is trying to get a piece of American defense spending. Do the executives of Airbus have no shame?

If you wonder what I'm talking about, let's go back and look at how Airbus was formed. In the early 1970s, the only companies producing large passenger aircraft were American firms. Airbus was formed and funded by Britain, France, Germany, and Spain to establish a European presence in this market. It is important to note that what we are talking about here is out-and-out socialism. Nowhere in the origins of Airbus are the dynamics of a free market involved.

When Americans complained about having a newly formed competitor subsidized by the national treasuries of four large nations, the Europeans answered with a logic that can only be described as insultingly arrogant. They claimed that American aerospace firms were subsidized by the huge government contracts they received for U.S. military hardware.

Never mind that these huge expenditures by the United States were to compensate for Europe's lack of resolve in protecting itself from the Communist menace. The job fell to Americans to provide a protective military umbrella, and in return we got criticized for how our spending supposedly subsidized our aerospace firms. Even more arrogant, however, was the obvious intent of Airbus to spend taxpayer money to kill American companies and American jobs.

By 1978, Airbus was selling aircraft to the subsidized state airlines of its partner nations. But it had not yet sold a single airplane in the American market. Airbus, however, was working a clever ploy. The firm approached financially weak U.S. airlines, first Eastern and then Pan Am, and in an era when airlines generally bought their airplanes, Airbus offered attractive leasing terms to the near-bankrupt American firms. You can do this when you finance your customer's spending with government money.

By 1995, Airbus had become successful, if it makes sense to apply that term to a socialist enterprise. Now emboldened, its managing director was quite blunt in admitting that his corporate strategy was to drive McDonnell Douglas out of business. And that is exactly what he did. Airbus shot down McDonnell Douglas. Then Boeing had to undergo the humiliating experience of getting 'permission' from the European Union to acquire the wreckage of McDonnell Douglas. Unbelievably, the EU antitrust panel worried that the Boeing acquisition would stifle competition.

That brings us to the irony of today. At the Paris Air Show this summer, top executives of Airbus, along with the French transport minister, gloated over Airbus booking more orders than Boeing this year. But why do people have such short memories? In all the newspaper accounts of Airbus victories, never is there mention that the firm is the child borne of a European cartel of the worst sort, created expressly for the purpose of putting tens of thousands of Americans out of work.

Would you like more? Airbus is planning to build a new airplane for European military forces. Last May, Airbus awarded a contract for the airplane's engines to a European consortium even though Pratt & Whitney is reported to have offered the best deal. The word is that European governments put pressure on Airbus to keep the business at home.

With all the mouth music we hear today from the European Union about competitive markets and sanctions against anticompetitive actions, hardly anybody remembers that Airbus was formed as the antithesis of free-market competition. By all that is just and right in the world, Airbus shouldn't even exist, let alone find the nerve to boast about its victories and try to insinuate itself into the American market for military hardware.

-Ronald Khol, Editor

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