1. Where do you stand? Do you think EU subsidies and soft loans to Airbus are fair? Why or why not? What advantages does Airbus gain from free financial support from the EU governments? Are complaints about EU subsidies fair in light of Europe’s history of democratic socialism?

2. Do you believe U.S. military contracts with Boeing amount to subsidies? Have these types of payments provided Boeing with unfair advantages? Justify your answer.

3. Assuming that Airbus cannot compete without subsidies and loans, is it likely that the EU will discontinue its financial support of Airbus? Is it in the EU’s interests to continue supporting Airbus? Justify your answer.

4. Visit theWeb site of the WTO (www.wto.org ) and enter the keywords aircraft or civil aircraft in the search engine. Summarize the current status of the dispute before the WTO between Airbus and Boeing.

5. In the event the WTO rules against Airbus and tells it to stop accepting subsidies and soft loans, how should Airbus management respond? What new approaches can management pursue to maintain Airbus’s lead in the global commercial aircraft industry?

In the 1960s, United States companies such as Boeing (www.boeing.com) and McDonnell Douglas were the dominant players in global aircraft manufacturing. Boeing was founded in 1916 in Seattle, and had many years to develop the critical mass necessary to become the world’s leading aerospace manufacturer. During World War II and the subsequent Cold War years, Boeing was the recipient of many lucrative contracts from the U.S. Department of Defense.