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Airbus 197, Boeing 38

UNCjigga

Lifer
Dec 12, 2000
22,859
5,252
136
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: uncJIGGA
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
The EU backing of airbus is one of the problems. US jet engine makers recently lost a contract to put engines on a airbus transport plane. The US design was cheaper, more efficent and cost less to buy and maintain.


The a380 is going to require airports to reengineer alot of things just so these things can land and move passengers on and off.

But at the same time, Boeing has been living off the same basic design for the past 30 years. But the same is true for airbus.
 

Dari

Lifer
Oct 25, 2002
17,136
37
91
Originally posted by: charrison
Originally posted by: uncJIGGA
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
The EU backing of airbus is one of the problems. US jet engine makers recently lost a contract to put engines on a airbus transport plane. The US design was cheaper, more efficent and cost less to buy and maintain.


The a380 is going to require airports to reengineer alot of things just so these things can land and move passengers on and off.

But at the same time, Boeing has been living off the same basic design for the past 30 years. But the same is true for airbus.
I think this is great for competition. It'll force boeing th improvise. Hopefully, they'll be able to destroy the unions in the process. That should lead to better margins and more efficiency.
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: Dari
Originally posted by: charrison
Originally posted by: uncJIGGA
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
The EU backing of airbus is one of the problems. US jet engine makers recently lost a contract to put engines on a airbus transport plane. The US design was cheaper, more efficent and cost less to buy and maintain.


The a380 is going to require airports to reengineer alot of things just so these things can land and move passengers on and off.

But at the same time, Boeing has been living off the same basic design for the past 30 years. But the same is true for airbus.
I think this is great for competition. It'll force boeing th improvise. Hopefully, they'll be able to destroy the unions in the process. That should lead to better margins and more efficiency.
And the bad news is, Boeing is shipping more jobs overseas where labor is cheaper. It appears final assembly will still remain here....for now.
 

rudder

Lifer
Nov 9, 2000
19,435
84
91
Originally posted by: charrison

But at the same time, Boeing has been living off the same basic design for the past 30 years. But the same is true for airbus.
Not really. The airframe design may look the same, but I garuntee if you look under the hood there is nothing there that resembles technology from 30 years ago. In order to develop a new airfram (ever seen Rutans designs) would cost a huge outlay of $$$$. Plus the flying public would be leery of stepping on an aircraft that is different from current airframes in use today.

Boeing was competing on producing a aircraft to exceed the capacity of the 777. I think they sidetracked that idea for a while and decided to concentrate on an aircraft that flew far fewer passengers but was much faster. The market for these huge aircraft is very small. And think what will happen to peoples attitudes about getting on one when 700 people die in an accident.

I think the fact that Airbus can produce a cheaper aircraft then Boeing right now is the main problem. Airbus does not have the same union woes as boeing and I think the EU conspires to subsidize the aircrafts cost making it cheaper to produce.

 

zephyrprime

Diamond Member
Feb 18, 2001
7,506
1
81
But boeing's Sonic Cruiser idea is a flop. They put it on indefinite hold. The problem with the smaller faster idea is that the plane is still subsonic so it doesn't offer enough of a speed advantage to justify the cost,
 

Dari

Lifer
Oct 25, 2002
17,136
37
91
This is how the corrupt and lazy french do business. Seems like Airbus got most of its deals the sleazy way, buy providing kickbacks to whoever buys their product. The situation is so bad that they even bought of the syrians, of whom they had no competition with because the US government forbade Boeing from doing business with them.

link
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Airbus's secret past


On the eve of the Paris Air Show, we explore the corrupt and allegedly corrupt methods that have boosted past sales


IN SEPTEMBER last year, a fraud squad, led by Jean-Claude Van Espen, a Belgian magistrate, raided Airbus's headquarters in Toulouse. ?They wanted to check whether there was possible falsification of documents, bribery or other infractions as part of the sale of Airbus aircraft to Sabena,? says Mr Van Espen's spokesman. The team of 20 Belgian and French investigators interviewed several Airbus employees during its three-day stay in Toulouse and carted away boxes of documents.

In November 1997 Sabena had approved an order for 17 Airbus A320s (narrow-bodied aircraft) which it did not need. Even more oddly, it had doubled the order at the last minute to 34, a move which helped trigger the airline's collapse four years later.

Though nominally controlled by the Belgian government, Sabena was run by the parent company of Swissair, SAirGroup, which had owned a stake of 49.5% since 1995 and which also went bust in 2001. A former Sabena manager, who arrived after the Airbus order was placed, says that the planes were not needed: ?It was a fatal business decision.? A Belgian parliamentary commission's recent report confirms that the Airbus order was a big cause of Sabena's collapse.

Mr Van Espen's separate criminal investigation is continuing. According to the report, it started in October 2001 after Philippe Doyen, then a Sabena employee, lodged a complaint. Among other things, he suggested to Mr Van Espen that he interview Peter Gysel, a former Swissair employee now working at Airbus, who put together Sabena's deal with Airbus. Mr Gysel denies any impropriety. The former Sabena manager says: ?I never got the slightest whiff that the decision was driven by kickbacks, side-payments and so on. But I cannot rule anything out.? Neither does Mr Van Espen.

Today airlines are ordering about 400 aircraft a year. But in good times 800 planes, worth around $60 billion, are sold a year. In the past ten years Airbus (originally a consortium, now owned 80% by EADS and 20% by BAE Systems) has caught up with Boeing, which had enjoyed two-thirds of the market since its 747 jumbo-jet entered commercial service in 1970.

Many aircraft are no doubt bought and sold in entirely conventional ways. But many are not. After all, lots of airlines are still state-owned and not subject to normal business rules. Commission payments (licit or illicit) on multi-million-dollar aircraft deals increase the capital cost of aircraft, which are therefore subject to higher depreciation or operating-lease charges, or both. But these extra costs are barely discernible in the pool of red ink created by the carriers' perennial losses.

Aircraft purchases drag on for years, as airlines play Boeing and Airbus off against each other. Especially in a buyer's market, deep discounts are common, performance guarantees are demanding and manufacturers have to offer all sorts of sweeteners (for instance, aircraft trade-ins, or unusual guarantees) to persuade an airline to switch to their aircraft.

Unsurprisingly, given the regulated nature of international air travel, politics plays a part. For instance, no sooner had Air Mauritius bought Airbus A340S in 1994 than it obtained an upgrade from Paris Orly to Charles de Gaulle airport, which is Air France's main base with better onward connections.

Aircraft purchases have long been associated with controversy. In the 1970s, when Lockheed was still making civil jets, it was caught bribing Japanese officials to buy its L1011 wide-bodied airliner. A Japanese prime minister was later charged and convicted in 1983 for taking a bribe. Prince Bernhard of the Netherlands was also disgraced for his involvement with Lockheed. This scandal led in 1977 to Congress passing the Foreign Corrupt Practices Act (FCPA), which forbids American companies, their officers or their representatives from bribing foreign officials.

Critics (including this newspaper) have often pointed out that American firms can side-step the FCPA by using foreign subsidiaries and nationals to pay bribes. Boeing says that its policy is to adhere to the spirit and letter of the FCPA, that its systems of controls ensure employees comply with this policy, and that no Boeing employee has been charged under the FCPA. In 1982 Boeing pleaded guilty to false statements about commissions on the sale of commercial aircraft prior to 1977. Boeing also says that there have been public hearings in the Bahamas over allegations of bribery in the 1990 sale of deHavilland aircraft to Bahamas Air, during Boeing's ownership of deHavilland.

Airbus has not been subject to such constraints. France ratified an OECD convention to outlaw bribery of foreign public officials in 2000. Until then the government even permitted French companies tax deductions for giving bribes.

For years, as they steadily lost market share to the European challenger, the Americans have been outspokenly critical of Airbus. In the 1980s the beef was the huge subsidies that European governments poured into the industry. Now that Airbus repays such launch aid, that is less relevant, especially as Boeing receives indirect subsidies through America's defence budget and space programme.

But the American government has also spoken out on the subject of bribery. Two years ago Grant Aldonas, an under-secretary for international trade, told a congressional committee: ?...unfortunately this [aircraft manufacturing] is an industry where foreign corruption has a real impact....this sector has been especially vulnerable to trade distortions involving bribery of foreign public officials.?

According to a European Parliament report, published in 2001, America's National Security Agency (NSA) intercepted faxes and phone calls between Airbus, Saudi Arabian Airlines and the Saudi government in early 1994. The NSA found that Airbus agents were offering bribes to a Saudi official to secure a lion's share for Airbus in modernising Saudi Arabian Airlines' fleet. The planes were in a $6 billion deal that Edouard Balladur, France's then prime minister, had hoped to clinch on a visit to see King Fahd in January 1994. He went home empty-handed.

James Woolsey, then director of the Central Intelligence Agency, recounted in a newspaper article in 2000 how the American government typically reacted to intelligence of this sort. ?When we have caught you [Europeans]...we go to the government you're bribing and tell its officials that we don't take kindly to such corruption,? he wrote. Apparently this (and a direct sales pitch from Bill Clinton to King Fahd) swung the aircraft part of the deal Boeing's and McDonnell Douglas's way.

Kuwaiti kickbacks?

Not even the NSA, however, knows about everything in the aircraft-manufacturing industry as it actually happens. Consider the history of an Airbus order placed by Kuwait Airways Corporation (KAC), another state-owned airline.

In November 1995, Reuters reported that Kuwaiti prosecutors had questioned Bader Mallalah, KAC's then chief financial officer, over allegations of embezzlement made against him by KAC. The firm's chairman, Ahmed al Mishari, had suspended Dr Mallalah from his job the previous month. But KAC had trumped up the allegations against Dr Mallalah to put the lid on a story of corruption in which its then chairman was himself involved.

That story began exactly five years earlier in Cairo, where KAC had set up temporary headquarters after Iraq's invasion of Kuwait in August 1990. Most of its planes would inevitably be lost or damaged, so Mr al Mishari was planning a shiny new post-war fleet. Naturally, both Boeing and Airbus were asked to tender. Both firms expected politics to play a part in KAC's choice, especially after an American-led coalition had liberated Kuwait.

Shortly after the liberation of Kuwait, Boeing and KAC met in London. One person present says Mr al Mishari gave the impression that the order would be Boeing's. After all, until then, American companies had won most of the large reconstruction contracts from a grateful government.

Airbus hoped otherwise. In 1991, shortly before the Paris Air Show, Jean Pierson, the then boss of Airbus, met Mr al Mishari at the Churchill Hotel in London. The two talked in private for part of the time, so what they discussed is not known. Two clear inferences can, however, be drawn from subsequent events: Mr al Mishari promised the order to Airbus; and Mr Pierson pressed for an announcement at the imminent air show.

As substantial public funds were involved, KAC was supposed to follow formal process in Kuwait before placing the order. This included approvals from the Ministry of Finance and the public-spending watchdog. None of these approvals was sought before the air show. In June 1991, at the show, Mr al Mishari stunned Kuwaiti officials and Boeing, when he announced a firm order for 15 Airbus aircraft, worth $1.1 billion, and options for nine more, worth up to $900m. A delighted Mr Pierson trumpeted the deal as Airbus's first single order for all its aircraft types.

Most unusually, Boeing was not asked for its ?best and final? offer, according to a former KAC employee. Boeing's response to the announcement was to offer generous discounts to KAC?so that its package was around $100m cheaper than its rival's?but it was too late. The upshot of a meeting in the summer of 1991 between the boss of Boeing Commercial, furious American officials and the Crown Prince of Kuwait was a messy compromise. KAC would order the engines for the Airbuses from General Electric; Boeing would receive an order for two wide-bodied planes as a sop; and the firm order for 15 Airbus aircraft would go ahead provided that KAC bought from Boeing in future.

This left Mr al Mishari in a rather awkward spot. KAC had an option to buy nine more aircraft from Airbus. An airline is usually able to walk away from an option deal if it forfeits the modest deposit paid. But this case was far from normal. The company that was to take up the option was not KAC itself but a subsidiary, Aviation Lease and Finance Company (ALAFCO), which Mr al Mishari had set up in Bermuda in September 1992. ALAFCO was to buy the aircraft and lease them to KAC. In late 1992 Mr al Mishari confirmed to Mr Pierson that ALAFCO would buy the nine planes and sent off a $2.5m deposit. By buying the planes through ALAFCO, Mr al Mishari intended to bypass formal governmental approval.

There was more to the deal. Airbus chipped in a total of $450,000 between 1992 and 1994 to help with the costs of setting up and running ALAFCO. On December 15th 1992 ALAFCO appointed a part-time commercial adviser, Mohamed Habib El Fekih, a Tunisian national. His day job was then as head of sales in the Middle East?for Airbus. Under his ALAFCO contract of employment, a copy of which The Economist has and which was to run for three years from January 1993, Mr El Fekih received $5,000 a month, and $80,000 in back pay for ?services? rendered to ALAFCO from February 1st 1990?31 months before ALAFCO'S incorporation?to December 31st 1992. The $5,000 was paid each month from ALAFCO's account number 201-901-04 at the Commercial Bank of Kuwait in New York to Mr El Fekih's personal account (number 0000003930B) at Crédit Lyonnais's branch in Blagnac, France, where Airbus is based on the outskirts of Toulouse.

By 1993 three of the nine aircraft under option, all cargo planes, were nearly ready for delivery. However, Dr Mallalah, who was also ALAFCO's chief executive, insisted that the transaction be subject to formal procedure in Kuwait. This meant competitive tenders from Airbus and Boeing. Unsurprisingly, Airbus, with inside knowledge from its two-hatted vice-president, Mr El Fekih, was able to match exactly offers from Boeing, after Boeing came in over $50m cheaper. With nothing to choose between the offers, ALAFCO selected Airbus, on the grounds that KAC's fleet now comprised predominantly Airbus aircraft.

The deal sailed through KAC's board and the Ministry of Finance. However, Dr Mallalah provided Kuwait's public spending watchdog with full details of ALAFCO's order for the cargo planes. It refused to sanction the deal. Consultants concluded in early 1995 that the purchase of the cargo aircraft was not justified. The Ministry of Finance told KAC not to proceed. After Dr Mallalah submitted a report to KAC's board on the affair, Mr El Fekih resigned from ALAFCO in March 1995.

Mr El Fekih says that he acted in an honest way; Mr Pierson approved his ALAFCO contract, as did the boards of KAC and ALAFCO; his ALAFCO contract had nothing to do with the sale of Airbus to KAC; KAC cancelled its option; ALAFCO never bought any Airbus aircraft; he acted as a consultant to help set up ALAFCO as an aircraft-financing company; and he declared his earnings to the taxman. Airbus says that it offers this sort of support to customers, when asked. The present owners of the ALAFCO business confirm that ALAFCO bought three Airbus aircraft.

Of the other six aircraft under option, three were not converted into firm orders. Two Airbus A320s were leased to Shorouk Air in Egypt. This joint-venture between KAC and EgyptAir was specifically set up to find a home for them, but is being liquidated because of massive losses. Kuwait's Ministry of Finance leased another.

Mr al Mishari, sacked as the chairman of KAC in 1999 after spending almost his entire career with the airline, owns a shopping complex in the Salmiya district of Kuwait, which local wags have dubbed the ?Airbus Centre?. Mr al Mishari, whose family is wealthy, suffered financial problems when the Kuwaiti stockmarket collapsed in the early 1980s. Mr al Mishari declines to comment, as does KAC.

It is not irrelevant to ask if the price of the Airbus aircraft was inflated to allow for kickbacks. No evidence of graft has ever come to light. However, no policeman, in Kuwait (or elsewhere), has looked for any.

India Ink

What about cases where police have carried out investigations? In March 1990 India's Central Bureau of Investigation (CBI) filed a first information report (FIR). It was investigating allegations that Airbus had bribed highly placed public servants and others to induce Indian Airlines (IA) to order its aircraft.

In March 1986 state-owned IA had ordered 19 Airbus A320s, worth $952m, with an option for 12 more, later exercised. This was despite the fact that, when IA set up a committee in 1983 to recommend replacement aircraft for its ageing Boeing fleet, the A320 was not considered?it had not then been launched or flown. With approval from the Indian government, IA had in July 1984 paid Boeing a deposit for 12 Boeing 757s, large narrow-bodied aircraft.

Several civil servants and IA officials were named in the FIR. One name not on the list was that of Rajiv Gandhi, India's prime minister in 1984-89, who was killed in a bomb explosion in May 1991.

How has the CBI's investigation progressed in the intervening 13 years? Hardly at all, despite the hounding on public-interest grounds of the CBI in Delhi's High Court since 1998 by B.L. Wadehra, an anti-corruption lawyer based in Delhi. The Economist has examined the publicly available court documents?the CBI's status reports on its investigation are secret? from Mr Wadehra's litigation.

These papers allege, first, that in October 1984, weeks before Mr Gandhi, a former pilot, succeeded his mother, IA received an offer from Airbus for A320 aircraft, a smaller and less expensive plane than Boeing's 757. It required urgent attention. Second, that in November, the aviation ministry gave IA just three days to appraise the offer for Mr Gandhi's office.

Much later, in 1990, Indian Express, an Indian newspaper, reported a leaked manuscript note which showed that Mr Gandhi had decided at a meeting on August 2nd 1985 that IA ?should go in for Airbus A320 aircraft?.

Mr Gandhi's correspondence file on the deal mysteriously vanished. The court papers show that civil servants reconstructed 29 pages of the missing file for the CBI by obtaining copy correspondence from government departments. Remarkably, this task took seven years?and even then the reconstruction was only partial.

After the green light from Mr Gandhi, approvals from IA and government bodies were a formality. For instance, the IA board approved the Airbus order at a meeting on August 30th 1985, which started at noon. The quality of the analysis presented to the board on the competing offers was pitiful. The board considered only one criterion?comparative fuel efficiency. Even for that, the data were incomplete. The A320 with the engine chosen by IA had yet to be tried and tested anywhere; provisional data only were included in the report for Boeing 737s ?since no technical data supplied by the company?.

But Boeing had not been asked for any. This was because two hours before the board meeting, at 9.50am, IA's managing director, who is named in the FIR as an alleged recipient of kickbacks, received a letter from Richard Elliott, then Boeing's regional sales director. Boeing offered to supply up to 35 of its 737 aircraft, its narrow-bodied rival to the A320, with a discount of $5m per plane. This would reduce IA's investment in new planes by $140m, stated Mr Elliott. IA's board brushed the offer aside on the grounds that ?if Boeing was [sic] too serious...they [sic] could have made the offer earlier?.

The Delhi court has a withering opinion of the help Airbus has given the CBI. It allowed Mr Wadehra to add Airbus's Indian subsidiary to his action on the grounds that Airbus in France was not co-operating. Airbus told Mr Wadehra that French law forbade it from answering his questions. ?[Airbus] sells its aircraft on their merits,? the firm insisted.

The court has castigated the CBI for its dilatory approach. It took the Indian authorities until 1995 to contact Airbus for information, only to be told that such requests should be routed through the French government. The CBI told Mr Wadehra, despite trying Interpol and diplomatic channels, it was not getting any help from the French government. The French embassy in Delhi in effect told Mr Wadehra to get lost when he wrote to ask why France was not co-operating.

Mr Wadehra's case is now topical. This is because in March last year, IA's board approved an order for 43 Airbus planes, worth around $2 billion. The order now needs government approval. However, in September 2000, the Delhi court ruled that the Indian government should not approve further purchases from Airbus until the CBI had obtained the information it wanted from the French.

The upshot of the IA story is that no serious attempt has been made to establish whether or not Airbus paid kickbacks to Mr Gandhi and associates. The CBI has not answered our written questions.


Mounties and Banks

But there are police forces which have shown rather more resolve and initiative than the CBI. One important case establishes that Airbus has paid ?commissions? to individuals hiding behind shell companies in jurisdictions where ownership of companies is not a matter of public record, and where strict bank secrecy applies.

Airbus's first big sale in North America was a $1.5 billion deal, signed in 1988, to sell 34 aircraft to the then state-owned Air Canada. The middleman was Karlheinz Schreiber, a German-Canadian with connections to politicians in Germany and Canada. Mr Schreiber emerged as a figure in the financing scandal that engulfed Germany's Christian Democrat party and its top politician, Helmut Kohl, a former chancellor, in the late 1990s.

In August 1999 the Royal Canadian Mounted Police, acting on a German arrest warrant, nabbed Mr Schreiber. In 2000, Mr Schreiber was charged in Germany with tax evasion on money he had received for the Airbus transaction and other deals. The Süddeutsche Zeitung, a German daily, has supplied a copy of Mr Schreiber's indictment to The Economist. According to this document, Airbus signed a consultancy contract (amended four times) with International Aircraft Leasing (IAL) in March 1985. IAL, which was to help with the Air Canada deal, was a shell company based in Vaduz, Liechtenstein, and a subsidiary of another Liechtenstein-registered shell, Kensington Anstalt.

According to the indictment, between September 30th 1988 and October 21st 1993 (ie, as Air Canada took delivery of Airbus planes), Airbus paid a total of $22,540,000 in ?commissions? to IAL. $10,867,000 was paid into IAL's account number 235.972.037 at the Verwaltungs-und Privat-Bank in Vaduz and $11,673,000 into IAL's account number 18.679.4 at Swiss Bank Corporation (SBC) in Zurich. During extradition proceedings against Mr Schreiber in 1999, Airbus admitted to these payments. In October 2000 Mr Schreiber won a suspension of execution of his case.

The court ruled that IAL belonged to Mr Schreiber, but also that, to the extent that Mr Schreiber had paid out the Airbus ?commissions? as Schmiergelder (?grease monies?), these payments could be tax deductible. Mr Schreiber's German tax lawyer later told the court: ?Schmiergelder were not openly paid to the ?greased? person by [Airbus]. It was through third persons to make reception anonymous and the Schmiergelder unrecognisable as such.?

So who got the commissions? After years of police investigations in at least five jurisdictions, it is still not clear. According to ?The Last Amigo?, a well-researched book on the affair by Harvey Cashore and Stevie Cameron, both Canadian journalists, a lot was withdrawn in cash. Mr Cashore, a producer on ?the fifth estate?, Canadian Broadcasting Corporation's main investigative programme, says that Mr Schreiber's bank records and diaries showed that he usually followed a simple formula for dividing up the money: half for Canadians and half for Europeans.

The book alleges that there may have been a smaller scam within the bigger scam: an Airbus employee may have got some of the money. Some of the money was transferred into sub-accounts at SBC in Zurich. One of the sub-accounts, code-named ?Stewardess?, received as much as one-eighth of the commissions. The book suggests that this account was intended for Stuart Iddles, Airbus's senior vice-president from 1986 to 1994.

Mr Iddles's wife bought Casa Las Estacas, a luxurious beach-front villa in Puerto Vallarta, Mexico, in September 1992. Documents in The Economist's possession show the price was $1.5m. According to a person involved in the deal, the money was wired from account number 154963-01-10 in the name of the Ciclon Foundation at the Zurich branch of Lloyds, a British bank. Mrs Iddles confirms that she bought the villa in 1992, but says she has not the ?foggiest idea? how much it cost, or which bank the money came from. Mr Iddles has denied any impropriety. Airbus says it has not been indicted in any jurisdiction over the Air Canada deal, or over any other sales. It adds that no investigator has found unethical behaviour on its part.

Syrian Scandals

Only one case of Airbus's colluding with a middleman apparently to bribe officials to buy its aircraft has led to convictions. According to Syria's state news agency, three people were sentenced in Syria in October 2001 to 22½ years imprisonment each (later reduced to ten years) for ?serious irregularities? in connection with state-owned Syrianair's order for six Airbus A320s in 1996. The court also imposed a fine on the three of $268m. They were a former minister for economic affairs, a former transport minister, and Munir Abu Khaddur, the middleman. Mr Khaddur was sentenced in absentia, and is reportedly living in Spain. The court found that the men had forced the airline to buy the planes, worth $240m, and as a result Syrianair had incurred ?big financial losses?.

The only inferences to be drawn are: either there was a miscarriage of justice; or bribes were paid. If the latter, the news agency did not release details of how much the men embezzled. Quite why bribes would have been necessary is puzzling. Because America deems Syria to be a sponsor of terrorism, Boeing has long been prohibited from exporting there. The Syrian government declines to comment.

The result of our investigations into instances of corruption or alleged corruption by Airbus suggests that Mr Van Espen will have a very long haul as he tries to establish whether ?commissions? influenced Sabena's decision to buy Airbuses. The order for the 34 A320s could be viewed as incompetence. But nobody can predict the results of Mr Van Espen's inquiry.

The parliamentary report says Sabena's board received some lacunary information that was misleading. The choice of Airbus supposedly meant Sabena was confident of strong sales growth. Yet a month after the order was placed, SAirGroup's chief executive, who also sat on Sabena's board, said: ?We're now in the last year or years of the boom in air travel.? (We do not mean to imply by inference that the chief executive was corrupt.)

Most of what is recounted in this article happened before Airbus's present top management team arrived, before it was established as a proper company, and before France adopted the OECD convention on bribery.

No one doubts the company's ability to compete across the whole product range with Boeing. By the time next week's Paris Air Show is over, Airbus will probably be well ahead of its rival in market share, thanks to an attractive range of planes. But if charges of corruption involving Airbus were to emerge from Mr Van Espen's investigation of Sabena, that would deal the company's reputation a severe blow.

 

drewshin

Golden Member
Dec 14, 1999
1,464
0
0
*yawn* more french bashing. if you look hard enough, you'll find bad news anywhere.
it's great though, wines i was buying for $40 and up im finding now for less than half the price.
 

CaptnKirk

Lifer
Jul 25, 2002
10,054
0
71
Can't bash the French on this
Airbus is getting orders, and the U.S. chose to boycott the Paris Airshow by not showing up to teach them a lesson.
Boy - we are really teaching Boeing a lesson aren't we. We'll show France, we won't go to to your Air Show -
so you will have the sales potential all to yourselves. The plane that Boeing chose NOT to match designs with is
the hit of the Airshow. Now you can see the money coming into play for those leased tankers the government is
going to pay for (twice) to obtain from Boeing. Boeing blew it when they 'Merged' with McDonnel-Douglas by
killing off the Douglas line as competition to the legacy Boeing line, and using the cash flow from the Military
sales side of the McDonnell product line to have a price war with AirBus.

Boeing lost the price war by not coming up with a new concept airplane, they cancelled all of their potential
futuristic designs to play a proffit margin game, but AirBus had a Coalition of the Willing to bankroll their products.

The Lockheed and kick-back thing is just the way you had to do buisiness at the time, some got 'more caught' than others.
In the world sales market you do whatever the client needs to clase the sale, Boeing and Douglas were doing the same.
 

CaptnKirk

Lifer
Jul 25, 2002
10,054
0
71
Token display - the sentiment was not that of enthusiastic participation.
The world noticed.
May hurt our companies a lot more than spiting France did.


LE BOURGET, France - The U.S. Defense Department's top weapons buyers who were barred from participating in the Paris Air Show this year may not be coming back to future events.

The Pentagon plans to cut its foreign appearances by staging a significant presence every two years at only two international events - the United Kingdom's Farnborough Air Show and Singapore's Asian Aerospace event, organizers of both shows told The DAILY.

U.S. government officials who briefed the organizers on the new plan said they want to reduce costs and the task of dispatching large contingents to foreign events each year.

A policy of cutting back the U.S. presence could be a heavy blow to the Paris event, one of the premier international shows, and a major draw for a global industry of aerospace and defense contractors seeking to conduct business with both Europe and the U.S. military, which is the world's largest military customer.

"You have to have significant U.S. involvement in your air show to truly say, 'this is an international air show,'" said David Norriss, director of marketing and business development for Farnborough.

Two spokesmen for U.S. European Command said they had not heard of such a plan. Navy Lt. Dan Hetledge at the Pentagon and Air Force Master Sgt. John Tomassi at the show said operational commitments restricted the number of U.S. military planes participating this year to four on static display, compared with 12 flying at the 2001 show.

"This [reduced presence] is basically due to the worldwide commitments we have going on right now," Hetledge said. "So, the Paris Air Show being every other year, it's hard to tell what our representation will be in two years."

He also said, "...a lot of press have tried to [characterize this smaller presence] as a retaliation against France [for its stance on Iraq], but it's not about that at all. As a matter of fact, in spite of all our worldwide commitments to the war on terror and the number of troops we have on the ground [in Iraq] and everything going on in the world today, we wanted to have some representation, and the number of aircraft were fluctuating all the way up until the day they arrived. We weren't sure how many we could actually get there because of the commitments. ... There's no plan in the works to make it a permanent draw-down or scale-back that I'm aware of."

Tomassi said the response of the international public to the U.S. presence - an F-15, an F-16, an Apache helicopter and an E-2 Hawkeye - "has been great. On the public day, we had people waiting an hour to get in to our corral to come and see our aircraft. Every day, we've had people come up and shake our hands and thank us for what we've done [in Iraq]. A lot of people have said, ... 'the people of France are behind you.'"

<B>'Significant presence' </B>

Although U.S. industry officials are committed to growing internationally, they often size their staffs proportionately to the Pentagon's presence. After the Pentagon scaled back at this year's Paris Air Show, for example, large U.S. contractors sharply reduced their own staffs and about 100 fewer U.S. companies registered at the event, compared with 2001.

The Pentagon prohibited any officer above the rank of colonel from attending the Paris show and banned flying demonstrations by U.S. military aircraft.

By contrast, U.S. officials have told Norriss's staff to expect a "very significant" presence at next year's biennial Farnborough show, a sign of the Pentagon's new event policy.

In addition, U.S. embassy officials have informed Singapore's Asian Aerospace organizers that the Pentagon has selected the event as the other venue it plans to substantially support by sending top generals and acquisition officials.

Norriss said the Pentagon's decision was not based on politics, but on business needs. The Pentagon deems "Farnborough a very good platform to come to the market," Norriss said.

But the Pentagon's new cost-saving policy also applies to the two shows it plans to support. Farnborough officials were warned to reduce the costs of security, Norriss said, which had ballooned in 2002 after the Sept. 11, 2001 terrorist attracts heightened security concerns at major events.
 

Dari

Lifer
Oct 25, 2002
17,136
37
91
Originally posted by: CaptnKirk
Token display - the sentiment was not that of enthusiastic participation.
The world noticed.
May hurt our companies a lot more than spiting France did.


LE BOURGET, France - The U.S. Defense Department's top weapons buyers who were barred from participating in the Paris Air Show this year may not be coming back to future events.

The Pentagon plans to cut its foreign appearances by staging a significant presence every two years at only two international events - the United Kingdom's Farnborough Air Show and Singapore's Asian Aerospace event, organizers of both shows told The DAILY.

U.S. government officials who briefed the organizers on the new plan said they want to reduce costs and the task of dispatching large contingents to foreign events each year.

A policy of cutting back the U.S. presence could be a heavy blow to the Paris event, one of the premier international shows, and a major draw for a global industry of aerospace and defense contractors seeking to conduct business with both Europe and the U.S. military, which is the world's largest military customer.

"You have to have significant U.S. involvement in your air show to truly say, 'this is an international air show,'" said David Norriss, director of marketing and business development for Farnborough.

Two spokesmen for U.S. European Command said they had not heard of such a plan. Navy Lt. Dan Hetledge at the Pentagon and Air Force Master Sgt. John Tomassi at the show said operational commitments restricted the number of U.S. military planes participating this year to four on static display, compared with 12 flying at the 2001 show.

"This [reduced presence] is basically due to the worldwide commitments we have going on right now," Hetledge said. "So, the Paris Air Show being every other year, it's hard to tell what our representation will be in two years."

He also said, "...a lot of press have tried to [characterize this smaller presence] as a retaliation against France [for its stance on Iraq], but it's not about that at all. As a matter of fact, in spite of all our worldwide commitments to the war on terror and the number of troops we have on the ground [in Iraq] and everything going on in the world today, we wanted to have some representation, and the number of aircraft were fluctuating all the way up until the day they arrived. We weren't sure how many we could actually get there because of the commitments. ... There's no plan in the works to make it a permanent draw-down or scale-back that I'm aware of."

Tomassi said the response of the international public to the U.S. presence - an F-15, an F-16, an Apache helicopter and an E-2 Hawkeye - "has been great. On the public day, we had people waiting an hour to get in to our corral to come and see our aircraft. Every day, we've had people come up and shake our hands and thank us for what we've done [in Iraq]. A lot of people have said, ... 'the people of France are behind you.'"

<B>'Significant presence' </B>

Although U.S. industry officials are committed to growing internationally, they often size their staffs proportionately to the Pentagon's presence. After the Pentagon scaled back at this year's Paris Air Show, for example, large U.S. contractors sharply reduced their own staffs and about 100 fewer U.S. companies registered at the event, compared with 2001.

The Pentagon prohibited any officer above the rank of colonel from attending the Paris show and banned flying demonstrations by U.S. military aircraft.

By contrast, U.S. officials have told Norriss's staff to expect a "very significant" presence at next year's biennial Farnborough show, a sign of the Pentagon's new event policy.

In addition, U.S. embassy officials have informed Singapore's Asian Aerospace organizers that the Pentagon has selected the event as the other venue it plans to substantially support by sending top generals and acquisition officials.

Norriss said the Pentagon's decision was not based on politics, but on business needs. The Pentagon deems "Farnborough a very good platform to come to the market," Norriss said.

But the Pentagon's new cost-saving policy also applies to the two shows it plans to support. Farnborough officials were warned to reduce the costs of security, Norriss said, which had ballooned in 2002 after the Sept. 11, 2001 terrorist attracts heightened security concerns at major events.
this is how the french view corruption in their country
 

CaptnKirk

Lifer
Jul 25, 2002
10,054
0
71
Looks like the French have an 'Oil Money' & Corruption problem that
is nearly as involved as the 'Oil Money' & Corruption problems that we
have in the United States - Oil Barons are running both shows.
 

CADsortaGUY

Lifer
Oct 19, 2001
25,162
1
76
www.ShawCAD.com
Originally posted by: uncJIGGA
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
Don't worry Washington state will bail you out

CkG
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: uncJIGGA
Wowzers...Boeing is getting beat up like the 5th grader in 8th grade math! They just lost the $12.5 Billion Emirates contract to Airbus, bringing Airbus' YTD new orders to 197 vs. Boeing's measly 38. What's going on here? Is America just not competitive in airliners anymore, or is the Frenchified EU-backed Airbus consortium too powerful and playing heavy-handed politics? Is this part of the backlash against the USA for going to war with Iraq?

Also, I don't keep up with big airliners anymore but I always thought the latest 737s, 767s and 777s were better than anything Airbus had...

EDIT: Seems the bulk of the Emirates contract was for the new A380 jets (double-decker) which are simply bigger than anything Boeing offers. Ouch.
Why buy new 737s when you can upgrade the wings

I bet boeing is making a small fortune on retorfits like this. Each retrofit will save 92,000 gallons of jet fuel per plane per year.
 

CaptnKirk

Lifer
Jul 25, 2002
10,054
0
71
Winglets have been around for 25+ years, the MD-11 fleet had them as standard.
I don't remember exactly when the production line was terminated - late '80s or early 90s but -
Here's why I won't get on the MD-11
Or the DC-10
I worked on them in the late 60's & 70's and quit because of my perception of design flaws.
I will not ride on them !
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: CaptnKirk
Winglets have been around for 25+ years, the MD-11 fleet had them as standard.
I don't remember exactly when the production line was terminated - late '80s or early 90s but -
Here's why I won't get on the MD-11
Or the DC-10
I worked on them in the late 60's & 70's and quit because of my perception of design flaws.
I will not ride on them !
So how many of the crashes can be attributed to design flaws, accidents or bad maintance?
 

CaptnKirk

Lifer
Jul 25, 2002
10,054
0
71
Outward plug doors in the planes that blew the cargo doors led to the colapse of the cabin floors which locked the controls.
That's 2 design flaws. One being the door opening outward, not inward - pressure separates door from frame.
An inward opening door is held into the door frame by the pressure and kept seated.
Fairleads and control cables had to be moved from the center of the flooring to the proximity of the fuselage joining area,
outboard to where the strength was higher, and collapsed flooring would not jam control rigging - that's the second.
This happened on at least 3 aircraft that I know about, one early pre-production, then Air Canada and Turkey.

Cracks in the engine mount led to the separation of the engine at Chicago - that was a maintainence error, but the
wing asyemetry was caused by the retraction of flaps and slats on the wing that the engine came off of.
there was no check-ball system to prevent a loss of hydraulic pressure from letting the systems return to
their 'normal' position. One wing at full enhanced lift with flaps & slats, the other side retracted - rollover.

Souix City Iowa - Number 2 engine sheds turbine compressor cold stream blades, debris penetrates empenage
and cuts into hydraulic system. Again no check-ball system to prevent system pressure loss. All hydraulic fluid
is lost, reguardless of associated system. No controls, no gear down, no steering, flaps, slats, ailerons, rudder, or elevator.
A crude steering, or aiming attempt by differential throttle manipulation is made to point the plane at an airport,
then power is turned up and down to bring the plane down to try to make it land, almost worked, but controled crash.

There have been repeated burn-downs caused by bird strikes to the engines, where debris from broken engines have had
parts penetrate the wing causing fires - loss of aircraft, but minimal loss of life. Why didn't the L-1011 & 747 have the same
F.O.D. equals fire rates as the DC-10 ? Lockheeds engines were in same relative position, Boeing used same engines.

Engine #2 location high on the tail steructure is a maintainence night mare, as well as the position adding a 'Torque-Arm'
element to the flight attitude, the plane tends to want to 'Nose over'. The support structure is subject to fatigue stress from
thrust being taken at an angle, vectored into the main fuselage, not technically a 'Flaw', but it's a poor design.

Each aircraft manufacturer has it's particular shortcomings, but cutting safety corners for cost margin is unacceptable.
The design phase of the DC-10 started nearly a year after the L-1011 design work commenced, and it flew 6 months
before the Lockheed plane. The time had to be made up somewhere, I think they did it on the cheap.
The lack of back-up & redundancy systems for safety is the short-cut approach that they took.
 

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