Dividends and Airbus offers subsidy concession to end US tariffs

In business such as the airline business, where there are 2 major players, governments see the airline companies as employment generators, skilled workers value added, ribbons to cut and university graduates to be employed. The plane is more than a plane and when it does, government subsidies go into the negotiations. As long as the 2 companies in this case Boeing and Airbus sell about the same ratio of planes, no one really matters. In the case of Airbus A380, the situation was different. Boeing’s planes were better and had greater sales so governments offered the plane at lower rates or subsidized them.

In an article by Tim Hepher of Reuters. the US went to the WTO or World Trade Organization and filed a complaint, it has now been 16 years and Airbus said it would increase loan repayments to France and Spain to settle the complaint.

The issue has been the WTO examined both sides and both the US and the EU were helping their airline makers Boeing and Airbus respectively. Airbus is increasing payments and now feels it is compliant with the WTO and besides it stopped sales of the A380 because of low sales.

The US had imposed a tariff on spirits and the EU wants the US to take off the tariff.

Another issue with the WTO is President Trump has blocked appointments to the appeal process. Typically a person has a set term and those on the Appeal Process of the WTO are coming due and the US will not allow replacements which means no appeals can be heard. Then the President can say the WTO is not working for the anyone including the US.

Linking to dividend paying stocks, all governments around the world subsidize some businesses for a multiple reasons – the firms hire university graduates, why have a school system if everyone leaves? the firm is is the correct industry for the future? people know the leaders better than others? and you can come up with other reasons. Sometimes dividend paying stocks are in the mix just because they are reasonably successful. Government policies matter and changes in them, can and do affect companies. Ensure you vote in the next election.

There are more questions than answers, till the next time – to raising questions.

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