The trade war with America may need “to get bad before it gets better”, the boss of the world’s biggest aircraft maker has warned.
Guillaume Faury, chief executive of Airbus, said incoming tariffs from President Trump’s administration would create an environment that was either “so bad for both sides that you need to come to a resolution”, or cause major “suffering” to the US economy and thus force a compromise.
“I am not suggesting that there won’t be any tariffs,” the Frenchman told The Sunday Times. “I cannot anticipate the form, the duration, the magnitude of tariffs. [And] I don’t know how the political leaders in Europe will respond.”
However, he insisted that Airbus would be able to handle what was thrown at it and had “cards to play” to pressure Trump’s government to make crucial concessions.
“Given the distribution of our operational system, and the global market we are serving … we think that there are ways to adapt,” Faury said. “We have manufacturing sites in the US, so we think that we have some cards [to play].
“There will be a need for adaptation — it will hurt at the beginning. So I will not say that I am optimistic, but I think realistically we will be able to manage the situation.”
• Airbus boss: European aerospace braced for Trump tariffs
The comments from Faury came just before Trump is set to hail “Liberation Day” on Wednesday — when a raft of protectionist measures, designed to promote American jobs at the expense of free trade, come into force.
Failing a last-minute reprieve, tariffs of 25 per cent will be imposed on imports from Mexico and Canada — America’s two biggest trading partners. Likewise, the US president will levy import taxes of 25 per cent on cars and car parts coming into the US. Steel and aluminium tariffs have already been imposed, as well as punitive measures on goods entering from China.
“We have been ripped off by every country in the world, friend and foe,” the president said this month.
Although the fate of the aerospace sector remains to be seen, Airbus is preparing for new import taxes that would have big implications for an industry where semi-finished goods cross borders multiple times.
US aerospace tariffs are expected in order to protect Boeing, the plane maker that has historically been the country’s biggest exporter by value.
Trump, however, has been more sparing with his praise for Airbus’s American rival since returning to the White House in January. In 2017, he lauded Boeing’s 787 Dreamliner jet as a “beautiful aeroplane”, but the company’s delayed delivery of two new Air Force One planes has led to the US president being more critical during his second term. “No, I’m not happy with Boeing … we gave that contract out a long time ago,” Trump said in February.
Despite his apparent misgivings, Trump awarded the Virginia-based company a $20 billion (£15.5 billion) contract this month to build the US military’s next-generation F-47 fighter jet.
Faury, chief executive of the €132 billion (£110 billion) Airbus since 2019, said that Airbus had done extensive planning for US import taxes. “In all of the different scenarios that we have looked at, they are either so bad for both sides that you need to come to a resolution; or it’s so imbalanced that the one putting tariffs on is suffering a lot,” he said.
“[In the latter scenario] there will then come a point where the industry says we need support so we can get out of this situation. A bit like we have heard from the car industry going to Washington and asking for ways of dealing with the situation because it would be too harmful.”
Airbus has beefed up its presence in the US in recent years. The company employs 5,000 people in America across the commercial aircraft, helicopters, space and defence sectors.
Faury said: “We are in the position to serve the US from the US. That’s one of the things we did, eyes open, and accelerated after the tariffs we had to suffer five years ago [during Trump’s first term]. We have a bit more experience when it comes to tariffs compared with other industries.”
‘Bigger’ hydrogen planes
Faury’s comments on US tariffs came as the most influential executive in commercial aviation insisted that Airbus had not given up on developing hydrogen-powered aircraft.
The aircraft maker told staff in February that the rollout of its hydrogen aircraft was “expected to come later than 2035” — the date it had previously targeted. It subsequently emerged that the timeline had been pushed back by five to ten years and the programme’s budget cut by a quarter.
“We continue to believe that hydrogen will be part of the solution,” he said.
Faury, 57, said that there was more to do to optimise the aircraft. “What we had not forecast or understood is that it will take much more time for the so-called hydrogen ecosystem to grow.
• The ‘albatross’ folding wing helping Airbus go green
“There is no point running a plane on green hydrogen if there is no green hydrogen available at scale.” Green hydrogen is a version of the gas made from renewable power sources.
Pressing ahead with the previous timescale risked producing a “sort of ‘Concorde of hydrogen’, where we would have a solution but one that would not be commercially viable at scale”, he told delegates at a conference in Toulouse last Monday.
Previous iterations of Airbus’s “ZEROe” programme envisaged a hydrogen fuel cell-powered plane that could carry up to 100 passengers with a range of 1,850km.
Faury said that delaying the project could allow for the development of a larger plane. “We were targeting about 100 [seats] … I think it is quite likely that we will end up with more room,” he said.
As Airbus grapples with hydrogen, Faury issued a further warning on the long-term viability of quotas for sustainable aviation fuel (SAF) — seen by many as the industry’s only tool to decarbonise at scale.
Worries over sustainable aviation fuel
SAF is made in a number of ways, including from used cooking waste, clothes and tyres.
Quotas stipulate that it must represent 2 per cent of total aviation fuel burnt in the UK in 2025, rising to 10 per cent in 2030, and 22 per cent by 2040. Similar rules in the EU also require 2 per cent in 2025, but rise moderately in the early years to 6 per cent by 2030 and 20 per cent by 2035.
It is the ramp-up beyond 2030 that concerns Faury. This is because airlines will increasingly look to source SAF from countries that are able to produce it more cheaply. In extreme cases, this could lead to airlines burning extra fuel as they “tanker” it from those countries selling cut-price SAF.
“The beginning of the trajectory is very reasonable,” he said. “I am a bit more worried that we need a level playing field on a global scale to have the real successful development of SAF.
“If you want SAF to go beyond 15-25 per cent, the fragmentation of the regulatory framework recreates big differences in competitiveness. That is the thing that will slow down SAF.”
Unlike hydrogen power, SAF is a “drop-in” fuel — meaning that aircraft engines need few changes to operate on it, and it can be easily blended with traditional jet fuel.
Faury said that if global SAF quotas can be harmonised, and sufficient production secured, standard combustion aircraft engines will still be operating for the rest of the 21st century.
“[By then] the transition to SAF will have happened to a large extent, maybe completely,” he said.
“I am very optimistic that we will find [enough] SAF, over time.”
