"It Would Be A Step In The Wrong Direction"

US government officials Tuesday warned their closest allies -- the British -- that loaning Airbus $680 million to launch the A350 could raise transatlantic tensions in the midst of a huge World Trade Organization dispute over government help for aircraft manufacturers.

"It would be a step in the wrong direction," said Neena Moorjani, a spokeswoman for the US Trade Representative in Washington. She was quoted by Bloomberg News as saying, "Negotiations will become much harder if the UK, or any other EU member state, commits subsidies to the A350."

But Britain, bent on keeping the jobs associated with manufacturing the wings for Airbus's rival to the Boeing 787, appeared poised to at least promise -- if not actually deliver -- the huge loan.

"We are considering the application we received seriously," a spokesman for the UK's Department of Trade and Industry in London told Reuters.

It's the latest shot in the world's biggest formal trade dispute to date. While Airbus says US plane-maker Boeing gets millions in direct and indirect subsidies from local and federal governments, Boeing -- which brought the suit to the WTO's trade court earlier this year -- says Airbus is getting too much of a sweetheart deal from the governments of Britain, France and Germany. The suit will likely take years to sort out.

FMI: www.boeing.com, www.airbus.com, www.wto.org