Who's the Boss?

["Ian Murray" <seamus2001@xxxxxxxx>]

[lord knows what kind of spit will fly when the FSC appeal comes out
of the WTO]

[from the Independent]
Trade tension over GE mounts as Boeing chief attacks Airbus
By Michael Harrison Business Editor in Paris
18 June 2001


The transatlantic war of words over Brussels' decision to block the
$42bn (£30bn) merger of General Electric and Honeywell escalated
yesterday, threatening to worsen trade tensions between Europe and the
US.

On the opening day of the Paris Airshow the European aircraft
manufacturer, Airbus Industrie, and its US rival Boeing clashed
spectacularly over the politically sensitive decision.

Harry Stonecipher, the Boeing president, claimed that it was not GE's
airline customers who were opposed to the takeover of Honeywell but
Airbus. Mr Stonecipher also took the European Commission to task for
blocking the deal saying: "I am particularly concerned by the position
taken by the European authorities. If the Commission blocks this
project there could be difficulties in the commercial arena. The US
approved this merger but if Europe rejects it what will happen? We
don't exactly become friends."

The Boeing executive's comments in an interview with French newspaper
Le Monde prompted a blunt response from Airbus, which criticised the
tone and content of Mr Stonecipher's remarks. Noel Forgeard, chief
executive of Airbus, said: "I am very surprised to see him threatening
the Commission and telling Brussels to do what he wants or we will no
longer be friends." Mr Forgeard said the US should be "looking for
solutions rather than trouble" and urged it to exercise "self control
and moderation".

Brussels has refused to approve the GE-Honeywell deal unless the two
companies agree to $4bn worth of asset disposals ­ a demand described
as "extraordinary" by the chairman of General Electric, Jack Welch.

But what appears to have angered Airbus most were comments made by Mr
Stonecipher about France's hostility towards US President Bush's
National Missile Defence Shield.

Mr Stonecipher said Jacques Chirac, the French president, should
remember that it was the inability to identify the threat posed by
Germany that had led to the Second World War. He went on to recall
Neville Chamberlain's fateful words after meeting Hitler that the
Germans would do nothing. "Doesn't that sound familiar?" asked Mr
Stonecipher.

Mr Forgeard said he was "extremely shocked" at the comments,
particularly bearing in mind France's "painful memories" of the war.

There are fears that the stand-off over the GE-Honeywell deal will
jeopardise future takeovers of US defence companies by their European
counterparts. John Weston, the chief executive of BAE Systems,
defended Brussels' tough stance over the merger and said that although
it could hamper BAE's attempts to expand further into the US he
thought it unlikely. "I don't see why it should do so," he said.
"Anything we plan to do in the US will be based on industrial logic.
The decks are clear if any future opportunities present themselves."

The United States now accounts for a third of BAE's turnover and 30
per cent of its shareholder base. BAE has 22,000 American employees
spread across 30 states.

There has been persistent speculation that BAE will eventually seek to
merge with Boeing but Mr Weston insisted there were "no plans
whatsoever"' for such a move.

Boeing and Airbus are expected to announce about $15bn worth of orders
at Paris this week. Airbus will kick off today with an order from Air
France for 10 A380 superjumbos and a deal to sell A321s to Air Maroc.
On Wednesday it is due to sign a deal with ILFC, the Californian
aircraft leasing company, for up to 100 jets.

Mr Forgeard said there was no doubt the aircraft market was softening
but he predicted a "soft landing" for Airbus with orders this year for
between 350 and 400 jets against 520 last year.