Airbus Under Review (before Buy) after imminent imposition of sanctions

Airbus

Bankinter | After the WTO authorised the US to impose tariffs of 5.5 billion dollars on Europe, the Office of the US Trade Representative (USTR) announced the imposition of tariffs from 18 October.

The bulk of the tariffs will be applied to imports from the four countries France, Germany, Spain and the UK which were responsible for aids to Airbus. The USTR has announced an increase of 10% on large aircraft and 25% on agricultural and other products, although it says it will re-evaluate the tariffs in light of discussion with the EU.

Bankinter analysis team opinion:

The confirmation of this new trade front, although in the case of aircraft tariffs have been established at 10%, is not good news for the European export sectors. USTR had already published lists of possible goods to which tariffs could be applied in July and April, among which were a broad variety of sectors. The WTO decision responds to disputes between the US and EU from 2004, in which the US complains about EU subsidies to Airbus and the EU about subsidies to US producers. The EU claim against the US was later and so the WTO decision is expected within months. In any case, the new tariffs and the weakening demand in the airline sector lead us to out our recommendation Under Review (previously Buy).