India, US finalizing $5.8 billion Boeing aircraft deal

NEW DELHI - India is aiming to finalize a $5.8 billion defense agreement with the United States before the November visit of President Barack Obama in a deal that would mark the biggest India-US defense deal ever.

The two countries are in talks for India to acquire 10 Boeing Co's C-17 Globemaster III planes, senior government officials said on Wednesday, adding the parties hope to make the announcement during Obama's visit.

"The $5.8 billion deal along with all potential support services and spares is the biggest-ever defense deal between the two countries till now," a senior government official told Reuters.

Another official said the actual announcement could be made during President Obama's visit.

India and the US are building a strategic alliance and security experts say New Delhi's growing ties with Washington are seen as a counterweight against China's growing military clout.

India and the United States signed a landmark civilian nuclear deal in 2008 and another pact in July last year, facilitating the entry of US companies like Lockheed and Boeing into India's lucrative defense market.

New Delhi expressed its interest in January to buy the heavy-lift C-17 Globemaster aircraft, capable of carrying large combat equipment and troops.

"India will receive the most advanced version of the C-17 available, which will include the latest upgrades and capability," said Vivek Lall, Boeing's Vice President India, confirming the deal.

Boeing has sold 221 C-17 Globemaster planes to several countries so far, including Qatar, United Kingdom, Australia and Canada, the company said.

India is looking to spend more than $50 billion over the next five years to modernize its armed forces and largely Soviet-era equipment, an effort that is in particular focus after the 2008 Mumbai attacks revealed security loopholes and the need to upgrade defenses.

It is also expected to finalize a deal to buy 126 fighter jets.

Boeing's F/A-18 Super Hornet is also competing with Lockheed Martin's F-16 , France's Dassault Rafale, Russia's MiG-35, Sweden's Saab JAS-39 Gripen and the Eurofighter Typhoon, produced by a consortium of European companies.

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Europe claims victory in Boeing subsidy row

A Boeing 787 Dreamliner aircraft is seen at the Farnborough Airshow in Hampshire on July 18, 2010

Photo: AFP

GENEVA - European leaders have claimed victory after the World Trade Organization was said to have judged massive US subsidies to Boeing illegal.

The report, which has not been published, reportedly stated that billions of dollars in US aid to the aircraft manufacturer were illegal, prompting officials from the European Union, France and Boeing's arch-rival Airbus to claim victory.

"Boeing benefits from billions of dollars in government subsidies that have been judged illegal by the WTO," said Airbus spokesman Rainer Ohler.

European Union trade commissioner Karel De Gucht said the WTO findings "support the EU's view" of the decade-long dispute.

The complaint was brought to the WTO by the European Union, part of a long-running transatlantic spat over subsidies to the aerospace sector.

It came a year after the WTO rapped the EU for illegally providing subsidies to Airbus, a unit of the European Aeronautic Defence and Space Company.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

But both sides were keen to spin their version of events as details poured into the public domain.

In a statement, Boeing said the WTO had issued a "massive rejection" of European claims that it received tens-of-billions of dollars in illegal subsidies.

"Nothing in today's public reports on the European case against the US even begins to compare to the 20 billion dollars in illegal subsidies that the WTO found last June that Airbus/EADS has received," Boeing said.

The EU had claimed Boeing received about US$23 billion of subsidies masked as defense research.

But there was some hope that the ruling could pave the way for a deal to end the often bitter dispute over aid.

Airbus called on its US rival to end the row and negotiate new funding rules for the aerospace industry.

"Now that both reports are available, it's time to stop blaming each other and to start assuming our responsibilities," said Airbus's Ohler.

"It's only when we stop these contentious suits and start negotiations that we'll be able to define new equitable rules of the game which will govern the future of the world's aerospace industry, a matter which is much more important than a transatlantic dispute," he added.

The EU likewise insisted that it is time to negotiate a settlement.

"Only negotiations at the highest political level can lead to a real solution," said European Union trade spokesman John Clancy reiterating the EU position that the new report "provides momentum in that direction."

Brussels brought its case to the WTO on October 6, 2004 -- the same day that Washington complained against EU subsidies to Airbus. It had therefore been frustrated by the time lag between the rulings on the two cases.

In Washington, US lawmakers aligned with either Airbus or Boeing voiced divergent views.

US Senator Richard Shelby of Alabama, a state where the European firm Airbus manufactures, noted that a WTO preliminary confidential report "confirmed that Boeing has in fact received subsides for aircraft development."

"Today's preliminary ruling clearly states that Boeing was involved in practices prohibited by the World Trade Organization," said Shelby, seen as an ally of Airbus parent EADS.

"While the confidential nature of this report will allow Boeing supporters to attempt to spin the facts in the media, it is clear that they can no longer rationally claim that this trade dispute is one sided."

But Representative Todd Tiahrt and Senator Sam Brownback of Kansas said the cases of Boeing and Airbus are quite different.

"None of the alleged subsidies to Boeing have anywhere near the market distorting effects of the launch aid the EU provided to Airbus," the two lawmakers said.

"The alleged US subsidies of standard economic development tools pale in comparison to the systematic EU strategy to take over the aviation industry."

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Boeing supports Vietnam Air’s aircraft interior upgrade

A Boeing 777-200ER of Vietnam Airlines sits at Frankfurt Airport in Germany. Boeing aids the carrier in the interior upgrade of the aircraft of this type - Photo: Mong Binh

HCMC - The U.S. airplane maker Boeing has partnered with Vietnam Airlines in a program to modernize the interior of the airline’s four 777-200ER aircraft in a bid to provide improved services for passengers.

Boeing said on its website that it supported the flagship carrier’s goal to improve its passenger service by increasing the overall passenger experience and comfort while continuing to expand the network.

As part of the partnership, Boeing Commercial Aviation Services developed a cabin layout for the discerning needs of the SkyTeam member airline and its passengers.

The interior upgrade program also covers relocation of business class seats, installation of new deluxe economy and economy class seats, and changes to the in-flight entertainment system and cabin cooling systems among other.

Vietnam Airlines has just put into service the first 777-200ER aircraft with the latest cabin interior modernization in line with the upgrade program. The carrier often uses the aircraft of this type for international flights to Germany’s Frankfurt and other long-haul destinations.

Nguyen Van Hung, executive vice president of technical at Vietnam Airlines, said the program offered passengers improved serviced and backed the airline on the way to higher rankings in the region.

“Our interior modernization program is a key part of our efforts to provide market leading services and passenger comfort, further affirming Vietnam Airlines’ position as a major carrier in Southeast Asia, especially after we joined SkyTeam,” Hung said.

Vietnam Airlines now operates more than 290 daily flights on 75 routes to 20 domestic and 26 international destinations. The Hanoi-headquartered airline is expanding its flight network as well as its aircraft fleet, from nearly 70 to 115 by 2015.

Dennis Floyd, vice president of fleet services for Boeing Commercial Airplanes, noted the program aided competitiveness enhancement for Vietnam Airlines.

“This interior upgrade will support Vietnam Airlines’ aggressive plan to continue to compete among the world’s leading carriers,” he said.

Both Boeing and Vietnam Airlines do not mention the cost of the interior upgrade program.

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Boeing delays delivery of Dreamliner to 2011

Photo: AFP

TOKYO - Aerospace giant Boeing said Friday it would further delay the delivery of its first 787 Dreamliner aircraft until early next year, in another set-back for the troubled jet.

Boeing's confirmation that it will not be able to hand over the aircraft to Japan's All Nippon Airways (ANA) was made in a statement released in the US and Japan and comes after it warned in July it may have to push the date back.

It said it now expects delivery of the first Dreamliner in the middle of the first quarter of 2011 as it continues to carry out tests on the plane, which is already more than two years behind schedule.

Boeing said the revision follows problems with the Rolls-Royce engines that will power the plane as it continues to test the aircraft.

"While Boeing works closely with Rolls-Royce to expedite engine availability, flight testing across the test fleet continues as planned," it said.

Boeing added that the scheduled revision will not affect the company's financial guidance.

The aviation giant is hanging its future on the mid-sized plane -- its first new model in more than a decade -- which draws on huge advances in aviation technology and can fly long-haul routes using up to 20 percent less fuel.

Boeing launched the Dreamliner program in April 2004 and initially had planned to deliver the first plane to ANA in the first half of 2008.

But the aircraft, which can seat up to 330 passengers, made its maiden flight in December last year, more than two years behind schedule.

The series of delays in the 787 program contributed to large losses for the company, as airlines such as Russia's S7 and Australia's Qantas last year cancelled orders for the problem-plagued machine.

Earlier this month flagship carrier Air India said it wanted compensation from Boeing for delays in the delivery of Dreamliner planes, with media reports saying the airline is demanding $1 billion.

Japan's ANA has ordered a total of 55 Dreamliners as it looks to gradually replace its fleet of kerosene-hungry vehicles with more economically and environmentally friendly models.

The Dreamliner's fuel efficiency is largely down to the fact that up to half the twin-aisle aircraft is made of lightweight composite materials, such as carbon fiber-reinforced resin, according to the company.

In July, Boeing said a series of issues, including problems with the "horizontal stabilizer" and instrumentation delays, could push the first delivery back into next year.

Boeing said it had detected a "workmanship issue" with the horizontal stabilizer, a component in the rear of the aircraft that is designed to stabilize it in flight. It is made by Italy's Alenia.

Meanwhile Boeing's fierce European rival Airbus is working on a new long-haul plane of its own -- the A350 XWB (Extra Wide Body). Another big project for Airbus is its long-delayed A400M military transport plane.

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