Julian Moxon and Andrew Doyle/TOULOUSE Ramon Lopez/WASHINGTON DC

Lufthansa is preparing to add its name to the Airbus A380 customer list following the 19 December decision by the manufacturer's supervisory board to industrially launch the airliner formerly known as the A3XX.


The launch is meanwhile set to spark a trade war with the USA unless the aircraft's backers can convince Washington that development is not illegally subsidised.

The German flag-carrier is understood to be looking at ordering a mix of A380 passenger and freighter versions and industry sources say a deal could be finalised during the first quarter.

"We see a need for a large aircraft from roughly 2007-2008 which could be used for daily flights from Frankfurt to New Delhi, New York, Tokyo and Singapore," says Lufthansa, adding that it is still studying Boeing's proposed 747X development .

"We do have time," the airline says. "We are such a good customer of Airbus and Boeing that we do not have to cling to a certain date for launch customer discounts."

Prompted by Boeing the Clinton Administration has been threatening action over A380 government launch aid for several months as the four Airbus governments of France, Germany, the UK and Spain committed to providing reimburseable advances for €2.3 billion ($2.14 billion) of the $10.7 billion development costs, to be repaid over 17 years.

Tension over a potential dispute was heightened just 24 hours prior to launch approval with President Clinton raising the issue at a US-EU economic summit held in Washington. He warned the EU that a trade fight could erupt over European "subsidies" for aircraft development.

The USA could file a complaint against the EU with the World Trade Organisation (WTO) if the four nations proceed with their finance plans. Boeing says the deal includes debt forgiveness and below-market interest rates on government loans, violating a 1992 US-EU agreement on aircraft subsidies, and a 1994 WTO subsidy code requiring loans be made on a commercial basis.

The European Commission (EC) rejects "completely" the US administration's criticism of the loan conditions, saying that the government funding is in the form of repayable loans, not subsidies. It insists that the funding "conforms to the 1992 agreement on subsidies to the aeronautics industry. If the USA decides to initiate a procedure against the European Union, the Commission will not hesitate to propose that the Council of Ministers take in response similar measures against the indirect subsidies which benefit Boeing through its contracts with NASA and the Pentagon".

The EC says, however, that the incoming Bush Administration will have to take account of the 22,000 employees in the US equipment industry that will benefit from the A380 programme. Airbus chief executive Noel Forgeard says "We are in strict compliance" with the 1992 agreement, which allows 33% of direct subsidy and up to 4% of indirect.

Deputy US Trade Representative, Susan Esserman has had preliminary and "cordial" talks with senior EU trade official Peter Carl during the recent summit. She formally raised the issue with the USA and EU, agreeing to resume talks on 11 January. Esserman says that "the terms of the government financing are not set yet, which is all the more reason to discuss the issue now, given its importance. We need to resolve it to avoid a problem."

Source: Flight International