Tuesday, August 29, 2006

Barbarians Buying Their Way Past the Gates?

According to this Bloomberg article, Russia has bought a stake in EADS, the parent of Airbus, and is seeking a management role. This is not a good development for Airbus and for commercial aviation in general. Airbus is already an overly statist institution that sometimes seems more like a European jobs program that happens to build planes than a serious commercial aviation enterprise. Adding in Russia, an emerging heavyweight of the new and improved centrally planned, statist economic model, will take Airbus in the wrong direction. Europe is a positively Smithian freewheeling capitalist heaven in comparison to Vlad Putin's Russia. If Russia exerts a management role in Airbus, it will be to redirect jobs and patronage to its dying aviation industry. Russia is already trying to merge its collection of aviation also-rans - Ilyushin, Tupolev, and Sukhoi - into a state-run monopoly called UAC. There is no doubt that with a stronger influence on EADS the Russian government would aim to work this dinosaur into the Airbus complex. Though without any decent technology and/or manufacturing prowess, I am not sure that Russian assets would bring anything at all to the table for Airbus except Russian government meddling in what is already a troubled institution.

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