EADS prepared to freeze A350 launch subsidies in Airbus-Boeing row


PARIS (AFX) - The European aeronautics Defence and Space Co (EADS), parent company of Airbus, is prepared temporarily to forgo government assistance to develop the A350 aircraft to avoid exacerbating the ongoing EU-US airplane subsidy row, French industry newsletter Aeronautique Business said.

EADS is expected to announce tomorrow that "it will not ask for the payment of reimbursable aid to finance the A350 as long as the dispute remains unsettled at the World Trade Organization," the newsletter said.

The US and the European Union have asked the WTO to resolve a dispute over billions of dollars in public aid for US aircraft maker Boeing Co and its European rival Airbus. Each side argues that government aid provided by the other has resulted in an unfair advantage in the global aircraft market, breaching rules of global commerce that are set by the 148-nation WTO.

The US is challenging aid for Airbus from the governments of four European countries -- Britain, France, Germany and Spain. The EU has contested US state and local subsidies for Boeing, as well as the huge military contracts awarded to civil aviation companies in the United States.

Aeronautique Business, citing a source close to the matter, said EADS "prefers to wait (for the assistance) to avoid aggravating the negotiations at the WTO."

Developing the new mid-sized A350 is expected to cost 4.35 bln eur, a third of which could be covered by reimbursable government loans. Airbus shareholders will be asked to approve the launch of the A350, which will compete with Boeing's 787 Dreamliner on long-haul flights, on Thursday.

Airbus is 80 pct owned by EADS and 20 pct by BAE Systems PLC. 

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