Boeing gains as U.S., EU move to end 17-year dispute over aircraft subsidies
|Toronto Star 15 Jun 2021 at 16:21|
Boeing (BA) shares moved higher Tuesday as U.S. and European officials appear set to resolve a 17-year trade dispute centred around subsides linked to the planemaker and its Paris-based rival, Airbus SE (EADSY).
European Commission chief Ursula von der Leyen, who marshals trade policy for the broader European Union, told reporters in Brussels Tuesday that a meeting with U.S. officials “has started with a breakthrough on aircraft. This really opens a new chapter in our relationship because we move from litigation to co-operation on aircraft — after 17 years of dispute.”
The two-decade long dispute, which came to a head with a World Trade Organization ruling in 2019 that gave the U.S. the green light to apply tariffs on $7.5 billion (U.S.) worth of European made goods, centres around alleged unfair subsides for Airbus from Brussels and tax breaks from Washington for Boeing, each of which compete for the title of world’s biggest planemaker in the now recovering market.
Boeing shares were marked 1 per cent higher in early trading Tuesday to change hands at $247.20 each, a move that would peg the stock’s year-to-date gain at around 15.4 per cent.
Any agreement that removes Boeing from the front lines of U.S. trade policy should be supportive for the planemaker, which is looking to both capitalize on the rebound in post-pandemic passenger jet demand and put the legacy of two 737 MAX disasters in 2018 and 2019 behind it.
Reports last week indicated that United Airlines (UAL) is looking to revamp its fleet with the bigger-than-expected MAX order — which could rise to as high as 150 planes — as carriers around the world prepare for a surge in leisure and business passenger demand as the global economy moves away from pandemic restrictions on travel, while Southwest Airlines (LUV) said it would convert nearly three dozen options for the planemaker’s 737 MAX aircraft into firm orders as it boosted near-term operating revenue forecasts amid improvements in summer travel bookings.
Reuters reported, however, that United May split its multibillion order between Boeing and its European rival, Airbus, with the purchase of several dozen of the planemaker’s A321 neo narrow-body jets, highlighting the ongoing challenge Boeing will face with its biggest competitor also freed from accusations of unfair support.