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European Aerospace Companies Could Be Affected by WTO Subsidies Dispute Between Boeing and Airbus
Many European aerospace companies including Safran (it owns Snecma) and Rolls-Royce are keenly awaiting the outcome of WTO subsidies dispute between Boeing and Airbus.
“It definitely could affect us,” Safran executive board chairman Jean-Paul Bechat told Show News. The French government has been a strong investor in Snecma — indeed, it owned 97% of it until a year ago — as a risk-sharing partner. “We appreciated that we would return that investment from royalties, with interest, too, if the product is a success. There is a return there; we have not cheated anyone.”
As for Boeing’s accusation that this kind of investment shields against commercial risk as it is not repaid in the event of failure, Bechat pointed out that is how a risk investment works no matter who makes it. “And in any case it only removes a percentage of the commercial risk.”
European companies stand ready to change this method of investment when they receive the same level of defense business as their competitors in the U.S., said Bechat.
“But whatever the outcome we will not stop our aerospace activities. Don’t worry about that,” he said.
Ironically the world’s best-selling turbofan engine, the CFM56 which is the exclusive powerplant on the Boeing 737, was developed (in a joint venture with GE) with substantial French government investment during the time Snecma was a government-owned company. —John Morris
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