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Is Boeing the King of Welfare? British Labour Party Thinks So

Oct. 11, 2017
The British political party also seems to think Boeing is trying to cripple Bombardier in advance of a hostile takeover.

Boeing Co. is the “king of corporate welfare,” the U.K.’s main opposition Labour Party said, accusing the U.S. aerospace giant of “egregious hypocrisy” in pursuing an illegal-subsidies claim against Bombardier Inc. that threatens thousands of jobs in Northern Ireland.

The U.S. slapped 300% of duties on Bombardier’s C Series aircraft after upholding Boeing’s contention that the Canadian company benefited from state support, allowing it to sell the model more cheaply. Labour’s trade spokesman Barry Gardiner said Wednesday that “no aircraft these days comes to market without support from government,” including those produced by Boeing.

“Boeing has absolutely been sucking at the milk of corporate welfare in America for far too long,” Gardiner said on Bloomberg TV. “They need to understand that the way in which they are playing this does not sit well with U.K. parliamentarians.”

The dispute has caused a headache for U.K. Prime Minister Theresa May, who wants to strike a trade deal with the U.S. as Britain leaves the European Union. At the same time, she needs to protect more than 4,000 Bombardier jobs in Northern Ireland, where she depends on the support of 10 lawmakers from the Democratic Unionist Party to get legislation through Parliament.

Hostile Tactic

Gardiner didn’t mince his words on Boeing, suggesting that the company is itself a “subsidy junkie” and accusing it of bringing the Bombardier case to “crush a competitor” and get hold of “superior technology” — including wings that are made in Belfast — by driving down its share price “so that they can try and do a hostile takeover."

A spokesman for Boeing in the U.K. said the U.S. action is about conforming with trade law and that “Boeing complies.” He declined to comment on whether the company was trying to hurt Montreal-based Bombardier’s share price in preparation for a takeover attempt.

Gardiner also said he plans to ask European authorities to investigate whether there is an anti-dumping case to be made against Boeing over its contract to sell 30 of the latest 737 Max 8 jetliners to Monarch Airlines Ltd., which filed for insolvency earlier this month.

The $3.1 billion order, originally placed in 2014, was last year restructured as a sale and leaseback, in which planes are typically purchased from a carrier and then rented back. The nature of the deal, which paved the way for Monarch owner  Greybull Capital LLP to make a 165 million-pound ($217.85 million) capital injection, suggests Boeing sold the 737s “at less than cost price into the European market,” Gardiner said.

Boeing said it doesn’t publicly comment on the financial arrangements of its customers.

Media Campaign

The defense and aerospace giant is under pressure in the U.K. after May, Defence Secretary Michael Fallon and Business Secretary Greg Clark all said it is putting at risk chances of winning future contracts from Britain.

The Chicago-based company on Tuesday took out a wraparound advert in London’s Evening Standard newspaper featuring a picture of a Chinook helicopter hovering over Stonehenge, and has also erected a giant billboard in Westminster subway station, which many lawmakers pass through on their way into the Houses of Parliament.

“We are absolutely coming at Boeing,” Gardiner said. “All the advertisements, all the front covers of the evening newspapers in London that they’ve put on are not persuading anybody other than that they’re playing dirty.”

By Alex Morales and Francine Lacqua, with assistance from Tom Keene, Thomas Penny, Benjamin Katz and Thomas Seal

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