Boeing Calls The Grant "Unfortunate"

The German Government is set to loan $1.49 billion to Airbus for the development of the A350 long-haul airliner. "As far as we are concerned all pre-conditions have been met and the funds are available," said Peter Hintze, parliamentary state secretary at the German ministry of economics.

Analysts read that statement as indicating that the German government believes all World Trade Organization rules have been followed.

The international news service AFP reports that Hintze said there are some "final issues" that still need to be worked out, including the division of work between Germany and France on the A30X airliner, which is expected to be a successor for the workhorse A320. "We want to be sure that (A30X) research and development will be done in Germany," he said. Most expect that the A30X will be built in Hamburg in northern Germany.

The A350 XWB will be constructed largely of composites, and is intended to rival Boeing's Dreamliner. France has already pledged nearly $2 billion for development of the plane. Britain has promised about $541 million. Overall development of the new Airbus is expected to top $16 billion.

Boeing issued the following statement from Ted Austell, vice president, Executive, Legislative and Regulatory Affairs,concerning the proposed grant, which was unveiled just prior to an expected announcement of a WTO final decision on previous government subsidies to Airbus.

"On the eve of such an important decision, it is unfortunate and disappointing to see news reports quoting a senior German official saying that Germany is prepared to provide 1.1 billion Euros ( $1.49 billion) for the development of the Airbus A350 – a move that flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed. It also is curious, although not unexpected, to see reports of Airbus calling for a negotiated settlement only 24 hours before a WTO ruling that both parties expect to uphold all of the major U.S. claims. As U.S. officials have repeatedly made clear, there's a place for negotiations, but not on programs and actions declared inconsistent with WTO obligations. Illegal European subsidies have done great harm to the U.S. aerospace industry. It's time to level the playing field and let companies compete on product, price, innovation, and customer support without market-distorting government subsidies."

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