Row over super-Jumbo aid

The A3xx: Sky high ambition

The US plane maker Boeing has questioned the legality of the aid package which will enable BAE Systems to help develop the new Airbus super-Jumbo.

The UK Government is to provide a loan of £530m, which means the project by the four-nation European consortium can get off the ground.

But the US, which has been criticial of what it sees as subsidies to Airbus, attacked the move.

It is reported that the US ambassador is seeking a meeting to clarify details of the finance deal.

Help for civil aircraft development is governed by a 1992 treaty agreed between the US and the European Union.

Boeing maintains that this latest package does not conform to the treaty.

But BAE Systems - formerly British Aerospace - argued that the money was a loan which would be repaid with interest, not a grant.

The aid will create an estimated 22,000 new jobs at BAE and its suppliers, and safeguard more than 60,000.

BAE Systems will build the wings for the new A3XX aircraft.

The new plane will be a double-decker with leisure facilities

Designers intend the super-Jumbo to have more than 550 seats spread over two decks, as well as shops and exercise areas.

"This really is the airliner of the future, and we have to be in at the beginning," said Trade and Industry Secretary Stephen Byers.

Confidence vote

BAE union spokesman Bill Bowrey said: "It is a massive, massive vote of confidence for the UK aerospace industry.

"We have worked hard for this and the announcement will be greeted with a lot of excitement from the workforce."

Development costs for the aircraft are forecast to be about £8bn, but progress on the project relies on funding from governments.

For the last few years BAE and the UK Government have been in discussion over the amount and terms of any aid package.

'Tremendous benefit'

David Learmount of Flight International said the speed of the decision was surprising, but the government had had to move to ensure the wing production remained in the UK and did not go to Germany.

Stephen Byers welcomed the jobs the project would create.

Thousands of jobs will be created

"Securing this level of high technology in the UK will come as a tremendous benefit to companies right down the supply chain," he said.

"The UK has a world-class civilian aero industry which makes an important contribution to our knowledge-driven economy."

Airbus still has to convince its potential customers that they need to buy the A3XX - and that it will actually be built.

The aid package will be seen as a confirmation that the project is moving forward.

BAE has already begun detailed design work on the new plane at its Filton plant in Bristol.

Boeing sceptical

But the projected jobs bonanza will rely on the super-Jumbo being a commercial success.

If the A3XX goes into production it is intended that BAE will build the wings to the new plane at its Broughton plant in north Wales.

Boeing is concentrating on its wide-bodied 777

Building work on the aircraft could start in two years' time, although it is expected to be three or four years before the super-Jumbo gets off the ground.

Boeing has poured scepticism on plans for the aircraft, arguing that there is no demand for such a plane.

"Boeing is saying there isn't a market ready for this yet, it's playing the whole thing down," said David Learmount.

"There is only room in the market for one of them, however, so whoever gets off the mark first with a decent product is ultimately going to have that market to themselves."

Boeing is concentrating on expanding its range of twin-engine wide-bodied planes, such as the 777.