No issues seen for Airbus with Biden
Joe Biden’s election as president is unlikely to have much of a direct impact on
Airbus operations in Mobile, according to a leading aerospace analyst.
“I don’t think the new administration will matter much. Airbus put in the Mobile facility
largely as insurance against a protectionist, America-first administration, and it did its
job admirably. But it still makes sense for Airbus to keep it there,” says Richard
Aboulafia, vice president of analysis for the Teal Group.
By bringing in components to be assembled in Mobile, European-based Airbus has
created what are essentially American-built planes. The Mobile final assembly plants
have brought new jobs and new supplier businesses while building commercial jets
that are sought after even in an industry hit hard by the coronavirus pandemic.
Still, a Biden administration could bring peace – or at least a ceasefire – in a trade
war with the European Union that has sometimes threatened the Mobile operations.
Mending relations with European allies is on Biden’s admittedly lengthy list of crises
and priorities to deal with when he takes office in January. In a Dec. 3 interview with
CNN, Biden said he had spoken with more than 20 heads of state since the Nov. 3
election and that it was important to re-establish “close alliance relationships” in
Europe and the Pacific. These relationships have deteriorated under outgoing
President Donald Trump over issues of global security, trade and climate change.
The Trump administration regularly applied tariffs to goods imported from Europe
and other countries. Twice it was announced that new tariffs would include
components shipped from European-based Airbus to its final assembly plant in
Mobile, where A320 and A220 commercial jets are put together for delivery to
primarily American-based airlines.
Both times the tariffs were rescinded after vigorous protest from Alabama elected
officials from the federal to the local level. The state’s solid Republican base and
close ties to Trump seemed to protect the Mobile operations from harm.
At the root of the conflicts is the bitter rivalry between American-based Boeing and
Airbus. For at least 16 years each airplane manufacturer has accused the other of
receiving illegal government subsidies, taking their cases to the World Trade
Organization. The details are far too complicated to deal with here, but the result has
been a tangle of economics, politics and litigation.
Sometimes, the results have been some unusual business practices. For example,
last month Bloomberg Businessweek reported that Delta Air Lines had found a
loophole in Trump tariffs on European-made planes imported to the U.S. from Airbus.
Six of seven planes were of a twin-aisle design that Airbus does not assemble in
Mobile. The loophole was this: A new airplane is defined as only having been flown in
testing and actual delivery. If the plane was flown from Europe to, say, Canada, it was
no longer considered a new plane that had been delivered to the U.S., and the
Trump tariff didn’t apply.
Thus, Delta saved a whole lot of money – it wouldn’t say how much – by flying the
planes to places like San Salvador, Tokyo and Amsterdam before putting them into
service in the U.S.
In November, a favorable ruling from the WTO against Boeing led the EU to impose
$4 billion in tariffs on American goods exported to the EU, notably including a 15
percent levy on Boeing airplanes. In 2019, an unfavorable WTO ruling against Airbus
caused the Trump administration to retaliate with $7.5 billion in tariffs against
But a negotiated peace may be imminent, whether it is initiated by an outgoing
Trump administration or an incoming Biden one.
Although the EU levied the tariffs, The Washington Post quoted German economy
minister Peter Altmaier as saying, “We are ready to withdraw or suspend our tariffs at
any time when the U.S. is ready to do so on their side, whether it is the current or
future U.S. administration.”
Trump first responded to the EU action by threatening retaliation. But in early
December, Bloomberg.com reported that the EU had signaled that a settlement might
be possible before Trump’s last day in office on Jan. 20.
Meanwhile, the United Kingdom has dropped its own tariff on Boeing in hopes that it
can reach an agreement with the incoming Biden administration after the Brexit
transition period ends on Jan. 1.
Given the perilous state of the passenger airline industry, the global economic woes
created by the pandemic and the pending change in presidential administrations, it
would seem prudent for all nations to resolve these longstanding trade issues. Biden
appears willing to work at restoring strong alliances with the EU.
The question is how soon he can get to it.
Airbus continues to mark milestones in Mobile. It recently delivered its 200th plane
in the A320 family of jets. The A321neo went to American Airlines. The 100th plane
assembled in Mobile, an A320neo, went to Frontier Airlines in December 2018.
As for the newer final assembly line for the A220 family, the first A220-300 that will
go to JetBlue has made its inaugural test flight. JetBlue will use aircraft from both
families of commercial jets.
No Paris Air Show in 2021
Because of uncertainty surrounding the coronavirus pandemic, the 2021 Paris Air
Show has been called off. It had been scheduled for June 21-27.
Held in alternating years with the Farnborough International Airshow in England, the
industry trade show allows manufacturers Airbus and Boeing to show their newest
aircraft and seek orders. In recent years, economic development delegations from
Mobile and the state of Alabama have been regular participants.
The next Paris Air Show will take place in 2023. Dates have not been announced.
- Jane Nicholes