The Office of the US Trade Representative (USTR) has raised its tariffs on large European aircraft to 15%, up from the 10% levy implemented last October, in an ongoing dispute over subsidies. “The United States is increasing the additional duty rate imposed on aircraft imported from the EU to 15% from 10%, effective March 18, 2020, and making certain other minor modifications,” the USTR says in a statement published on 14 February. At the centre of the ruling last October were EU subsidies for Airbus, which the arbitrator heavily criticised as being “WTO-inconsistent”, and causing adverse effects to the USA. While the USTR was permitted to impose up to 100% tariffs on $7.5 billion of goods — including Airbus jets — the office said at the time it would initially impose 10% levies on new commercial aircraft of more than 30t, and 25% levies on other products such as Irish and Scotch whisky, German machinery, and cheese. The increase to 15% is in response to a World Trade Organization report related to a longstanding subsidy dispute involving Airbus. That report, released 2 December, concluded that changes made to A350 and A380 development loans were insufficient to bring European governments into compliance with WTO recommendations. On 12 December, the US Trade Representative announced a review of the tariffs and requested public comments. It says it received more than 26,000 responses. “Based on this review, the US Trade Representative has determined to revise the action being taken by increasing the rate of additional duties on certain large civil aircraft, and by modifying the list of other products of certain current and former EU member states subject to additional 25% duties,” the USTR writes in its ruling. With this new ruling, the tariffs on non-aircraft products remain at 25%. Airbus has a large presence in the USA, including an A320 and A220 assembly site in Mobile, Alabama. It said in October that 40% of its aircraft-related procurement comes from US companies. The ruling, which applies to aircraft built in Europe, means that parts shipped over to Mobile to be assembled appeared to be exempt from the additional tariffs.
While US carriers with large Airbus fleets such as Delta Air Lines and JetBlue will receive some of their deliveries from Mobile, the majority of Airbus aircraft are still manufactured at the company’s European hubs of Hamburg and Toulouse. It is unclear as to what the effect of these increased tariffs will have on the affected airlines, as well as the traveling public who may ultimately pay higher fares as a result. Airbus has been working to mitigate the impact of tariffs since they were initially imposed. Chief executive Guillaume Faury stated at a briefing on 13 February that the tariffs have had a ”direct imipact” on its US commercial aircraft customers which “we are working to manage”. “Later this year the WTO is expected to authorise the EU to impose tariffs on US products. We remian hopeful that the US and EU will find a negotiated settlement to avoid further damage,” he says. The US government will be allowed to impose the tariffs until the EU brings its practices into compliance with WTO standards. In arriving at the $7.5 billion price tag, the arbitrator took into account the value of the lost sales of large Boeing aircraft as a result of the subsidies.

Source: Cirium

American Airlines says it expects it will not have the Boeing 737 Max in its schedule until mid-August, the last major US airline to plan through the lucrative summer peak travel season without the new generation aircraft, which has been grounded since March 2019. Earlier in the day United Airlines cancelled all Max flights through 4 September and on Thursday Southwest Airlines said it will not be scheduling the Max until 10 August. Delta Air Lines, Spirit Airlines and JetBlue Airways do not have any Max in their fleets or on order. “American Airlines remains in continuous contact with the Federal Aviation Administration, Department of Transportation and Boeing,” the airline writes in a note on its website on 14 February. “Based on the latest guidance, the airline anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft will occur Aug. 18, 2020.” The Fort-Worth-based carrier has 24 Max aircraft in storage and another 76 on order from Boeing. The type’s grounding is in its 11th month following two deadly crashes, and there is no indication when it will be recertificated and return to revenue service. The Federal Aviation Administration and Boeing continue to scrutinize the Max but so far no certification flight test has been scheduled. “American expects to gradually phase in the MAX for commercial service and will increase flying on the aircraft throughout the month of August and into September,” the airline adds. “Since American will gradually phase the MAX into our operation over the course of a month, additional refinements to our schedule may occur.” American’s executives told analysts on its full-year earnings call on 23 January that the airline was forced to cancel about 10,000 flights alone during the final quarter of 2019 due to the grounding. The airline said it expects to book a loss in 2020 similar to the $540 full-year loss incurred in 2019.

Source: Cirium

Avianca Holdings was served with a search warrant at its Bogota offices 12 February by the Office of the Attorney General of Colombia, which sought to collect information related to alleged irregular grants of free and discounted airline tickets, the parent of Colombia flag carrier Avianca disclosed in a 12 February US Securities and Exchange Commission filing. On 15 August, Avianca Holdings had commenced an internal investigation into the allegations and reported the investigation to the US Department of Justice, the SEC and Colombian authorities, the SEC filing states. The ongoing internal investigation is being independently conducted by the law firm Ropes & Gray. Separately, on 3 February Avianca commenced an independent internal investigation into its relationship with Airbus following the airframer's 31 January final agreement to pay a €3.6 billion ($4 billion) fine to settle multiple investigations from French, UK and US authorities for bribery linked to its commercial aircraft and defence divisions.

Source: Cirium