EADS Directors Vote To Go Without Government Funding -- For Now

Seeking to diffuse the trade tensions between the US and EU over aircraft manufacturer subsidies, Airbus parent company EADS decided Thursday to forego government loans for the development of the A350 -- for the time being. EADS called its move "a new window of opportunity" in the financing spat that has the US and Europe snarling at each other in World Trade Organization Court.

It's the biggest trade controversy ever and, if it is actually litigated in WTO Court, could take years -- decades -- to shake out.

"We strongly support government efforts to find an equitable and mutually supported resolution and we call upon our competitor to do the same," said EADS' co-CEOs Noel Forgeard and Tom Enders in a statement quoted by Reuters. The announcement came as EADS board members also approved the launch of the Airbus A350 -- designed as a direct competitor to the Boeing 787 Dreamliner.

As Aero-News has extensively reported in the past, the US filed a complaint to the WTO over European government loans to Airbus for development of new aircraft lines. The European Union immediately counter-sued, complaining that Boeing gets even more subsidies from NASA, the Department of Defense and local governments looking to land Boeing manufacturing facilities.

European governments have approved about one-third of the $5.3 billion in development costs associated with the A350. None of that loan money has yet been dispersed.

The US Trade Representative reacted angrily to the EADS overture Thursday. "It's clear that the EU countries are unwilling to stop subsidizing Airbus. Therefore, we will continue to push ahead with our WTO case," spokeswoman Christine Baker said in an e-mail statement quoted by the Associated Press.

There was no immediate reaction from Boeing on the olive branch extended by EADS. Industry analysts said the move was, in reality, pretty insignificant, since Airbus won't incur major costs in developing the A350 until 2006 and 2007. Airbus plans to launch the A350 in 2010.

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