John Whelan: EU support for Airbus could impact Irish dairy and whiskey again

In 2019, the US slapped a 10% tariff on imports of Irish Dairy products and whiskey

Disputes over the state aid by the EU to Airbus had a significant collateral impact on Irish exporters. File picture

The largest-ever corporate loan from the EU’s lending arm to Airbus, aimed at supporting new aircraft research as Airbus eyes a new plane by 2030, has ruffled the feathers of arch-rival Boeing and is highly likely to ignite a fresh tariff war.

Boeing wrote a letter to US trade representative Jamieson Greer last month asking him to demand a full accounting of the loan terms from the EU.

Boeing wants Greer to determine if the financing violates the 2021 US-EU aircraft subsidy agreement. 

The US trade representative has criticised the move, stating that the financing creates market uncertainty and threatens trade stability alongside other EU regulatory actions.

Back in 2021, the EU and the US reached an agreement after almost 17 years of disputes to suspend the related tariffs affecting $11.5bn of trade, as both sides made counterclaims of illegal state aid to their respective airlines, Airbus and Boeing.

In the agreement, both sides committed to overcome long-standing differences in order to avoid future litigation and preserve a level playing field between our aircraft manufacturers and will work to prevent new differences from arising. 

The agreement was geared to last for five years.

In 2019, disputes over the state aid by the EU to Airbus had a significant collateral impact on Irish exporters, when the US slapped a 10% tariff on imports of Irish dairy products and whiskey, as well as other European products, in punishment for what they deemed illegal subsidies to European aircraft manufacturer Airbus.

The current US investigation into illegal EU aid for Airbus comes at a time when Boeing struggles to return to regular profits and is grappling with the loss of market share to Airbus, which has been the world’s largest aircraft maker for the past seven years.

Boeing in crisis

Boeing’s existential crises began in 2018, when its 737 Max 8 plunged into the Java Sea off Indonesia, killing 346 people. This was followed four months later when another Max 8 crashed in Ethiopia and a Max 9 crash in 2024, inevitably tarnishing Boeing's reputation for safe engineering and forcing the Federal Aviation Administration to enforce daily manufacturing inspections. 

Profits tumbled, and debts soared, allowing Airbus to sweep ahead in aircraft delivery and enabling its share price to treble, while Boeing’s share price and profits remained stagnant over the past seven years.

Aircraft Leasing Ireland (ALI) members and their associated groups now control aircraft valued at more than $315bn (€271bn), representing 69% of the total value of all globally leased aircraft.

Airbus favoured as more reliable

The split between lease orders for Airbus and Boeing has in recent years favoured Airbus, as the more reliable supplier.

The scale of the challenge for Boeing was emphasised by SMBC Aviation Capital, a leading Ireland-based aviation finance company led by UCC graduate Peter Barrett, who reported placing a firm order for an additional 100 Airbus A320neo family of aircraft, valued at €9.6bn, at the Farnborough International Airshow in July.

“This significant new order will give our airline customers access to a continuous delivery pipeline of the latest technology A320neo family aircraft into the mid-2030s,” said Peter Barrett, CEO of SMBC Aviation Capital. 

“We are pleased to build on the deep partnership we have established with Airbus over the last 25 years, and this latest order reflects our confidence in the long-term demand for the A320neo family.”

However, Ryanair, the largest Boeing customer in Europe, has recently placed an order for 150 of the latest Boeing 737 Max 10, with a provisional follow on 150 for delivery from 2027 onwards, valued at $40bn (€36.3bn) at current list prices.

But the US Federal Aviation Administration has not certified the new aircraft yet. Boeing’s financial recovery following years of crashes, crises and regulatory problems hangs on getting the airworthiness certification for this 737 Max 10.

And whereas the EIB €3bn funding may be considered unfair state aid by the US, the Trump administration has over its two terms avoided directly placing tariffs on aircraft imports from Europe. 

Ireland’s role in global leasing and Ryanair’s major order support for Boeing is likely to ensure a continuity of the free pass for aircraft in the Trump tariff regime, but it may not protect the collateral tariffs on Ireland’s food and drink, if the dispute escalates.