Delta Air Lines, Inc (NYSE:DAL) criticizes the new U.S. tariffs on Airbus planes. It says that the tariffs will inflict great harm to most of the airlines in the U.S. Delta’s contract with the European multinational aerospace corporation Airbus has been longstanding.
A close outlook
Some analysts propose that Delta cuts short its contract with Airbus. This will have negative effects considering that the U.S. airplane maker Boeing lacks sufficient production capacity. Truth is Boeing can’t produce additional aircraft and deliver on time as Airbus did.
Aircraft purchases are not something someone wakes up one morning to do. They require long-lead durations for manufacture. Those that need to purchase make orders even years in advance.
Delta’s spokesperson opined, “Imposing tariffs on aircraft that U.S. companies have already committed to will inflict serious harm on U.S. airlines, the millions of Americans they employ and the traveling public.”
The government’s stand
U.S. Trade Representative Robert Lighthizer says the U.S. government is serious about imposing the tariffs. Delta and others will start feeling the pinch from Oct. 18 when the government imposes the tariffs. Reporters asked Lighthizer to explain the government’s decision further. The official revealed that Europe usually gave Airbus massive subsidies, an act that hurt the U.S. aerospace industry. Not only was the industry hurt, but also the workers who depended on it.
The World Trade Organization sided with the American government, and the two want Europe to stop the illegal delivery of subsidies. It is something that has been giving Airbus an unfair edge which shouldn’t be the case according to WTO. The sales of Boeing have been drastically affected, and it is sad litigations haven’t been successful. There is a pending case that has gone on for over 15 years.
In the meantime, government officials have already unveiled a list showing the new tariffs.
The E.U., on the other hand, isn’t taking the matter lying down. It has accused the U.S. of proving illegal subsidies to Boeing. In case this is true, it wouldn’t work quite well for the U.S. government since it is against the WTO rules.