Bitter Rivals Airbus and Boeing Agree: No One Wins a Trade War

(Bloomberg) -- The world’s two largest planemakers are fierce rivals who aren’t above employing hardball geopolitics if it will gain them an edge.

Yet the chief executive officer of U.S. manufacturer Boeing Co. and the commercial chief at European rival Airbus SE want no part of President Donald Trump’s trade war with China. They agree that nothing good will come from the tension that’s been gathering momentum over recent weeks.

Speaking at the Farnborough air show south of London on Monday, Boeing CEO Dennis Muilenburg made the case that finding a solution to the dispute is essential because the aerospace industry relies on the free flow of goods. His stance was seconded by Guillaume Faury, who runs Airbus’s operation making jetliners for airlines across the globe, using parts shipped in from dozens of countries.

“There will be no winner if there’s a trade war around the world,” Faury said in a Bloomberg Television interview. “Aviation will continue to be international. We are based in the U.S., in Europe, in China, we do business across those blocs.”

Airbus and Boeing are locked in a global duopoly for most of their aircraft, so any imbalance stands to hand the other side an advantage. While Muilenburg said the risk of Airbus benefiting from the current trade spat is “a concern we have,” he dismissed the notion of any sudden shifts in order or backlog patterns because the industry is long-term and Boeing has an established presence in China.

Aerospace is the biggest trade-surplus generator in the U.S. and provides key manufacturing jobs, while China relies on foreign aircraft to help fuel economic growth, Muilenburg said.

“We are concerned about some of the discussions right now around trade,” the CEO said in a separate interview with Bloomberg Television. “Our aerospace business thrives on free and open global trade and we’re hopeful we’re going to find solutions as alternatives to some of the tariff discussions that have been going on.”

Boeing generated 13 percent of its sales in China last year, up from 7 percent in 2011. Sales in the region during that time more than doubled. The Chicago-based company stands in the direct crossfire of the retaliatory measures between the U.S. and China. But Trump has also lashed out against Europe on trade, and said it’s a “foe” when it comes to trade.

Besides its relationships with China, Boeing can also rely on its proximity to the U.S. government. The company has “a seat at the table” as it tries to contribute to a solution to the trade dispute, Muilenburg said. “Our voice is being heard.”

The two aerospace giants are facing off this week at the Farnborough event, which alternates with Paris as the year’s biggest showcase for orders and announcements in the aviation world.

In the past, they’ve traded accusations at the World Trade Organization over government subsidies. Boeing’s complaints to the U.S. about state subsidies to Bombardier Inc. ended up driving the Canadian planemaker’s C Series jet into Airbus’s hands. The Toulouse, France-based manufacturer is now taking orders on that aircraft, now dubbed the A220, at Farnborough.

Airbus stands to pull in deals for its A320neo and A350 jetliners, while investors are waiting for an update from Boeing on a potential new aircraft that would slot in between its 737 narrow-body and 787 wide-body jets. Muilenburg reiterated in the interview that the company wants to make a decision next year on the new aircraft, nicknamed the 797, and is holding onto a time slot of 2025 for a possible debut.

©2018 Bloomberg L.P.