Airbus loans "fair"

US is challenging EU loans to build the super jumbo

The EU's trade office has sent details to Washington about European government loans for developing the new super jumbo, saying no trade rules on subsidies had been violated.

Boeing, the largest US exporter which recently reported a 112% rise in profits, has complained the subsidies are unfair.

On our side, we've kept to what we agreed to.

EU Trade spokesman

The four partners in the Airbus consortium - France, Germany, Britain and Spain - as well as Belgium, Netherlands and Finland are expected to loan about a third of the £7.5bn development cost.

There was no immediate reaction from US and Boeing representatives in Brussels.

European defence

The Europeans are hoping to challenge the Boeing 747's dominance of the lucrative long-haul market once the A380 begins flights in 2006.

"On our side, we've kept to what we agreed to," EU Trade Commission spokesman said on Monday.

He refused to say how much the loans would total, calling the information "market sensitive".

But he said the terms were in line with a 1992 agreement signed by the 15-nation EU and the United States on financing large civilian aircraft.

Italy and Sweden were also expected to make commitments soon marking the first time those five countries have participated in developing a new Airbus, the EU spokesman said.

The A380 double-decker, 555-seat jumbo will be the world's largest passenger plane.

US claim

There has been anger in the US over the EU government-subsidised scheme aimed at dethroning Boeing's 747 as the world's largest passenger jet.

Boeing has complained that EU has violated the 1992 trade pact and a 1994 World Trade Organisation agreement.

It claims Airbus receives loans with below market interest rates from British and German government.

The 1992 deal limits government loans to 33% of development costs and they must be repayable within 17 years at a minimum interest rate equal to the cost of government borrowing plus 0.25%.

While Bill Clinton was US president he hinted at a potential new trans-Atlantic trade dispute over funding for the super jumbo but left a decision on what action to take to incoming President George Bush.

British joy

The UK government has contributed £530m to the aircraft¿s development which will be 50% built in the UK and create 22,000 jobs.

UK manufacturing will benefit from more Airbus planes

It also means BAE Systems' 4,800 workers at Broughton, where the wings will be assembled, and the 4,500 staff at Filton design and manufacturing centre have a secure future.

The 13,000 jobs at Rolls-Royce engine workers in Derby will also be guaranteed.

Sale are expected to give a £20bn export boost to the country's economy over the next two decades

Test flight

Meanwhile Airbus new A340-600, a long-haul jetliner that seats 380 passengers, took off from the southern French city of Toulouse on Monday for its first test flight.

Airbus has called the plane its "longest and largest airliner yet".

The A340-600 is expected to begin commercial flights in 2002 when Virgin Atlantic is expected to take delivery of the first planes.

The plane, the company's largest four-engine wide body, marks the European consortium's latest attempt to beat Boeing.

The A340 series competes directly with Boeing's family of 777s.