[Congressional Record Volume 145, Number 55 (Wednesday, April 21, 1999)]
[House]
[Pages H2226-H2227]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 AIRBUS, THE EUROPEAN AIRCRAFT MANUFACTURER, A COMPANY THAT CANNOT FAIL

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Illinois (Mr. Lipinski) is recognized for 5 minutes.
  Mr. LIPINSKI. Mr. Speaker, I rise this afternoon to bring an 
important trade issue to the attention of my colleagues. Within the 
past 2 years, Boeing's share of the aircraft market has fallen from 70 
percent to 50 percent. Boeing is losing market shares to Airbus, the 
European aircraft manufacturer.
  Airbus was created in the early 1970s for the sole purpose of 
maintaining and fostering a European role in the production of large 
commercial jet aircraft. It is a combination of the major aerospace 
companies of France, Germany, the United Kingdom and Spain. Airbus, 
which is 60 percent owned by private companies, is not the property of 
the four European nations. However, it is still hard to view Airbus as 
a private business just like any other business.
  First of all, Airbus does not operate as a public corporation but, 
rather, it has special legal status under French law. This special 
status allows member companies to pool resources without having to 
disclose specifics about their combined financial activities. 
Therefore, Airbus remains a financial mystery.
  Also, France still has not completed the privatization of its 
aerospace firm, Aerospatiale. Given France's long history of 
substantial support to Aerospatiale, it is hard to believe that the 
French government will give up complete control of the company any time 
soon.
  Perhaps most importantly, the European Commission has the ability to 
save Airbus from bankruptcy if the need ever arises. Therefore, Airbus, 
due to its government backing, is a company that cannot fail. This 
gives Airbus a tremendous advantage because it has the luxury of making 
its business decisions with very little risk compared to Boeing, which 
must defend its business decisions to questioning stockholders, not 
supportive government officials.
  Airbus contends that it has earned its increased market share against 
Boeing by simply building the type of aircraft the airline industry 
wants to buy. It is important to note, however, that Airbus' success 
was achieved with significant governmental assistance. Because Airbus 
does not publish financial statements, it is difficult to know exactly 
how much government support it has received over the course of the 
years. However, it is known that the largest amount of financial 
support was provided in the 1980s when Airbus launched major 
development programs for new aircraft such as the A-320, the A-330 and 
the A-340. Therefore, Airbus was able to make new and different types 
of aircraft which helped attract new customers only because of 
increased, direct governmental aid.
  Although most of the government aid was in the form of repayable 
loans, it was still a subsidy because it would have cost Airbus much 
more to raise money on the private market. It would be nearly 
impossible for a private company to obtain aircraft development funds 
at a government borrowing rate. It is true that Airbus must repay the 
government aid with interest, but only as aircraft are sold. Therefore, 
there is no risk for Airbus when it develops new products, because if 
customers do not buy their new product, Airbus does not have to repay 
the loans.
  Again, Airbus, due to its government backing, is a company that 
cannot fail. It is no wonder that Boeing continues to lose market 
shares to Airbus. Airbus enjoys a tremendous competitive advantage 
because of the substantial and direct government aid it receives from 
four European nations.
  Airbus is no longer a young company trying to enter the aircraft 
market. It is number two in the market and gaining on Boeing each and 
every day, yet Airbus still relies on substantial government support. 
This is not right. We should not sit idly by as Boeing continues to 
lose out simply because it does not enjoy the same protectionist 
treatment as Airbus.

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