June 2, 2019 / 12:42 AM / 14 days ago

Airbus urges airlines to pressure Boeing over subsidy row

SEOUL (Reuters) - Airbus has written to airline leaders to appeal for their backing in a trade dispute with rival Boeing, warning of higher aircraft prices and passenger fares if the United States and European Union descend into a tariff war.

FILE PHOTO: Logo of Airbus is pictured at the Airbus A380 final assembly line at Airbus headquarters in Blagnac, near Toulouse, France, March 21, 2018. REUTERS/Regis Duvignau/File Photo

The appeal was issued in a letter to several airline bosses meeting in Seoul where the International Air Transport Association (IATA) has warned of the impact of broader global trade tensions, a person familiar with the issuance of the letter told Reuters.

The United States and Europe have been locked in a 15-year spat over mutual claims of illegal aid to plane giants.

U.S. President Donald Trump threatened last month to impose tariffs on $11 billion of European goods including planes and their parts, prompting the European Union to propose a list of $20 billion worth of U.S. imports it could hit in retaliation.

“If the tariffs are applied, the effects would include greatly increased costs to U.S. and European airlines, aerospace suppliers and manufacturers,” Airbus sales chief Christian Scherer said in the text of the letter seen by Reuters.

It asked airlines to “urge Boeing to enter into the negotiations proposed by the EU and Airbus”.

Airbus and Boeing had no immediate comment.

It is the first time either company has sought to directly involve the airline industry in the dispute, which is the largest ever handled by the World Trade Organization. U.S. carrier Delta Air Lines has said it opposes the U.S. tariff threats, saying they harm U.S. interests.

Speaking to reporters in Seoul, Delta CEO Ed Bastian said: “We’re a large Boeing customer, we’re a large Airbus customer. Tariffs ... would inflate the cost of investment in the aircraft, obviously we’re going to be concerned.”

Delegates at the IATA talks said airlines would weigh carefully whether to step directly into the aircraft dispute which has laid bare intense competition for plane orders and which has cost the warring parties tens of millions of dollars.

But IATA, which groups 290 airlines representing 82 percent of global traffic, is expected to express growing concerns about a worsening pattern of global trade tensions which has already depressed cargo business and threatens some passenger demand.

Reporting by Tim Hepher, additional reporting by Tracy Rucinski; Editing by Chris Reese and Himani Sarkar

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