Aircraft

War of words between Europe and USA rambles on

Airbus could soon tap €1.3 billion ($1.7 billion) of European public funds for the A350, in the absence of any credible steps towards a negotiated solution to the dispute with the USA over state subsidies for large civil aircraft, says Noël Forgeard, joint chief executive of Airbus parent EADS.

An imminent negotiated settlement through the World Trade Organisation (WTO) is not likely, so EADS may now seek launch aid from French, German, Spanish and UK governments, says Forgeard.

Airbus shareholders EADS and BAE Systems approved the launch of the A350 in October but said that, although the four governments had provided binding letters of support for the A350, they would delay disbursing launch aid in 2006 as long as there was a “credible prospect” of negotiations and the USA demonstrated “similar restraint” on support for Boeing.

Both sides in the WTO dispute – the US Trade Representative and the European Commission – have maintained that a negotiated solution is preferable in order to avoid damaging and protracted litigation.

Forgeard says, however, that an early agreement between EADS senior executives and Boeing’s president James McNerny to hold high-level, albeit informal, meetings in an effort “not to resolve the problem, that is up to governments to do, but to make common proposals” has not been pursued by the US manufacturer.

“This has not happened as the Boeing chief executive didn’t take that step. I imagine Boeing would continue to draw on federal and local sources of financing and that we would probably ask for repayable loans for the A350,” says Forgeard.

If Airbus moves to draw on the A350 launch aid, the USA may argue that this, and support for its other aircraft, has allowed Airbus to build market share at Boeing’s expense.

Speaking to Flight International at last week’s Asian Aerospace, Airbus chief executive Gustav Humbert said: “We have to discuss with the governments and Brussels what we will do. The decision will depend on whether they, on the government level, and we, on the industrial level, see a possibility to come to a negotiated solution [with the USA].” A decision on whether to apply for a disbursement of the pledged launch aid will be taken “in the coming months”, he says.

The US Trade Representative says: “As we noted in October, the four Airbus governments have already committed the A350 launch aid; the only remaining question was when Airbus would draw on the funds.

“While we have not seen any indications that the Airbus governments are planning to disburse the aid, any steps along those lines would only take us further away from a negotiated solution.”

AIMEE TURNER / LONDON