Page last updated at 08:17 GMT, Tuesday, 23 March 2010

Boeing criticises German loan plan for rival Airbus

Airbus A350 XWB
European governments are eager to help Airbus

US planemaker Boeing has reacted angrily to news that Germany plans to give a 1.1bn euro ($1.49bn, £1bn) loan to help Airbus develop its A350 plane.

Boeing vice president Ted Austell said the loan was "unfortunate and disappointing".

But Germany said it was legitimate as Airbus met all the loan pre-conditions.

Germany's move comes ahead of a much anticipated World Trade Organization ruling on European Union (EU) financial assistance to Airbus.

Boeing and arch rival Airbus have been at loggerheads for years over accusations that the EU provides subsidies to the European planemaker.

The WTO ruling will be communicated to Airbus later, but it is not expected to be made public.

'Illegal subsidies'

Peter Hintze, parliamentary state secretary at the German ministry of economics, said on Sunday that his government was preparing to make the loan for the A350, a competitor to Boeing's new 787 Dreamliner.

Illegal European subsidies have done great harm to the US aerospace industry
Boeing vice president Ted Austell

"As far as we are concerned all pre-conditions have been met and the funds are available," said Mr Hintze.

Mr Austell hit back, saying the move "flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed".

Development costs of the A350 are 12bn euros. France has announced support of 1.4bn euros and Britain is contributing 400m euros.

The Spanish government remains in discussions with Airbus over its funding contribution.

"Illegal European subsidies have done great harm to the US aerospace industry," Mr Austell said.

"It's time to level the playing field and let companies compete on product, price, innovation, and customer support without market-distorting government subsidies."

The US filed the WTO complaint in October 2004, alleging that EU loans were no longer valid since Airbus was now a major industry player and not a fledgling firm in need of start-up aid.

The EU has also filed a complaint against the US, accusing it of channeling multibillion-dollar state aid to Boeing.



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