COVID-19, tariffs, create trouble for Airbus

Alabama News

Unclear how coronavirus' effect on airline industry will impact Mobile aircraft production

AIRBUS134 - Progress Photos_164620

AIRBUS134 – Progress Photos

Airbus stock dropped 22-percent on France’s CAC Wednesday on worries that the near shutdown of air travel will slow down aircraft purchases. In addition, the United States is increasing U.S. tariffs on Airbus planes by 50-percent.

Tariffs on Airbus aircraft built in Europe are increasing from 10-percent to 15-percent due to a World Trade Organization ruling on illegal European subsidies to Airbus. The EU is prepared to impose tariffs on U.S. goods once the WTO rules later this spring on a similar case involving U.S. government aid to Boeing.

“The evolution of the global COVID-19 pandemic and its impact on the aviation industry reinforces the need to put this outdated case behind us and find a sustainable way forward for our industry,” Airbus spokesperson Clay McConnell told Reuters.

The tariffs do not affect aircraft built by Airbus at its plant in Mobile. The facility at the Brookley Aeroplex is building six A320 aircraft a month, with plans to bolster monthly production to seven planes by early next year. In addition, Airbus later this year will start production of the A220 in Mobile, in a joint venture with Canadian plane maker Bombardier.

The possible impending bankruptcy of all major U.S. airlines due to the coronavirus outbreak could result in significant cancellations of orders for Airbus planes. Airbus currently has about 5,900 A319, A320, and A321 variants on order. The planes are produced in Mobile, Toulouse, France, Hamburg, Germany and Tianjin, China.

Meanwhile, Airbus’ chief rival Boeing is indicating it likely will need a taxpayer bailout. Boeing stock dropped 17-percent Wednesday.

Tuesday President Donald Trump said “we have to protect Boeing,” as part of a “big, bold” coronavirus stimulus package.

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