Boeing, GE, United Technologies May Win Insurance Aid
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Boeing Co., the world’s second biggest airplane maker, soon may be eligible to buy American terrorism insurance at below-market rates, possibly escalating a dispute with Europe over airplane manufacturer subsidies.
Congress might give Boeing and engine makers General Electric Co. and United Technologies Corp. access to an airline insurance program set up after the 2001 attacks. Boeing said the measure is a “reasoned response” amid limited and costly options for liability insurance.
The benefit may buttress arguments by the European Union that Chicago-based Boeing is getting American subsidies, said Richard Aboulafia, an aerospace analyst for the Teal Group in Fairfax, Va. “No doubt they’ll seize upon this, even though both sides get ample indirect resources,” he said.
America and the European Union filed World Trade Organization complaints last week over aid to aircraft makers. America said more than $15 billion in government loans helped Airbus SAS overtake Boeing as the largest planemaker. The E.U., in a separate complaint, said Boeing got $23 billion in state tax breaks, military research, and Japanese aid to suppliers.
AMR Corp.’s American Airlines, UAL Corp.’s United Airlines, and other American carriers buy insurance from the government to cover losses linked to war and terror. The program reduces airline premiums as much as $560 million a year, the Air Transport Association, the carriers’ trade group, estimates.
Boeing’s premiums doubled as coverage shrank to $50 million from $2.5 billion after the 2001 attacks that involved four company airplanes. The company lacks an insurance policy for any terror damages that exceed $50 million and would have to pay any larger claims successfully brought after an attack.
“Including manufacturers in this program is a reasoned response to actual marketplace conditions,” said a Boeing spokeswoman, Amanda Landers, in an e-mail.
Congress in December gave Transportation Secretary Norman Mineta authority to extend the airline program to manufacturers. He declined. “There is commercial insurance available for manufacturers under reasonable terms,” a Mineta spokesman, Bill Mosley, said in an e-mail.
A measure approved last month by the House and a Senate committee would require Mr. Mineta to act. Coverage “is completely unavailable in the private markets, or punitively expensive,” said Senator Murray, a Democrat of Washington, and an author of the extension, in a statement. Boeing is the largest employer in Ms. Murray’s state.
The Bush administration opposed the legislation. “This expansion is unwarranted and would subject taxpayers to significant additional liabilities,” the Office of Management and Budget said in a statement last month.