IS BOEING GIVING UP ON
IS BOEING GIVING UP ON CIVILIAN AIRCRAFT?: There are two ways to interpret the news that Boeing is trying to acquire BAE Systems PLC, the British aerospace firm that is a 20% owner of Airbus, Boeing’s rival in the passenger plane market. The first is that Boeing is trying to make life difficult for Airbus ...
IS BOEING GIVING UP ON CIVILIAN AIRCRAFT?: There are two ways to interpret the news that Boeing is trying to acquire BAE Systems PLC, the British aerospace firm that is a 20% owner of Airbus, Boeing's rival in the passenger plane market. The first is that Boeing is trying to make life difficult for Airbus by threatening to absorb one of its owners. This doesn't make any sense, however, since the European Union Competition Commisioner can veto any merger on antitrust grounds -- which was why the GE-Honeywell deal was scotched three years ago. The British government also owns a golden share that could block any deal. The second is that Boeing is trying to enhance its core competency in defence manufacturing. BAE is "the largest Euopean defense company," but its civilian sales have been flat as of late. One wonders, however, if markets -- and airline companies -- wouldn't take this as a signal of Boeing's surrender to Airbus on commercial airliners. One final, subversive thought -- a good Leninist would argue that Boeing will try to increase its superprofits by exploiting current transatlantic tensions. An increase in those tensions would lead to increased defense spending on the continent. If Boeing acquires BAE, it becomes a vital player in any European arms buildup. Boeing CEO Phil Condit is going all out to woo key EU officials. I'm most certainly not a good Leninist, though.
IS BOEING GIVING UP ON CIVILIAN AIRCRAFT?: There are two ways to interpret the news that Boeing is trying to acquire BAE Systems PLC, the British aerospace firm that is a 20% owner of Airbus, Boeing’s rival in the passenger plane market. The first is that Boeing is trying to make life difficult for Airbus by threatening to absorb one of its owners. This doesn’t make any sense, however, since the European Union Competition Commisioner can veto any merger on antitrust grounds — which was why the GE-Honeywell deal was scotched three years ago. The British government also owns a golden share that could block any deal. The second is that Boeing is trying to enhance its core competency in defence manufacturing. BAE is “the largest Euopean defense company,” but its civilian sales have been flat as of late. One wonders, however, if markets — and airline companies — wouldn’t take this as a signal of Boeing’s surrender to Airbus on commercial airliners. One final, subversive thought — a good Leninist would argue that Boeing will try to increase its superprofits by exploiting current transatlantic tensions. An increase in those tensions would lead to increased defense spending on the continent. If Boeing acquires BAE, it becomes a vital player in any European arms buildup. Boeing CEO Phil Condit is going all out to woo key EU officials. I’m most certainly not a good Leninist, though.
Daniel W. Drezner is a professor of international politics at the Fletcher School at Tufts University and the author of The Ideas Industry. Twitter: @dandrezner
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