Air Transport

Ongoing WTO dispute leads to rethink on twinjet support

Shareholders at Airbus parent EADS are looking at alternative ways of funding the proposed Airbus A350 XWB widebody twin, which could signal an end to controversial launch aid for the programme.

EADS cancelled last week's board meeting where shareholders were due to discuss the industrial launch of the A350 XWB, a €9-10 billion ($12-13 billion) project controversially at the heart of the ongoing transatlantic dispute over support for large aircraft.

The meeting was cancelled due to a reported lack of agreement among EADS shareholders DaimlerChrysler, Lagardere and the French government over launch aid, with France thought to be reluctant to provide the project with repayable finance while the World Trade Organisation (WTO) dispute is active.

In November Airbus chief executive Louis Gallois said the manufacturer will make a formal decision on its proposed A350 XWB programme before the end of the month, but admitted this may be extended to early December.

Financing options could include funding the programme from cash reserves or raising debt on the commercial market and industrial partnerships, in addition to repayable launch aid.

The USA meanwhile filed its first WTO submission on 15 November, to which the European Commission will reply on 9 February. The EC has also asked the WTO to select panellists and set a timetable for its own case against the USA before 27 November. When this is done, both the US and EC panels will run in parallel.

The EC says: "We have not closed our doors to exploring a negotiated solution, in the context of which the question of launch investment and public support to Boeing could be addressed.

"Our examination of the US submission reconfirms the validity of our arguments. In addition, we are pursuing a case against the WTO-illegal subsidies granted by the US government to Boeing, which we are confident we will win."

Ted Austell, Boeing vice-president international trade policy says: "The US submission sets the clock ticking and this should focus the parties on whether there's any prospect for a negotiated settlement before the determination, next fall by the WTO, on the notion that launch aid, as a financing instrument for aircraft development, is not compatible with WTO rules."

He says additional launch aid would be an "unwelcome" development and would make it much more difficult for the US and the EC to secure a negotiated solution.

EADS co-chairman Manfred Bischoff is said to be preparing to quit his role to become chairman of DaimlerChrysler, which currently holds a 22.5% stake in the aerospace and defence business.