Brussels seeks change in Airbus aid rules

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The European Commission is negotiating an increase in the level of direct financial support the four partner governments in Airbus can provide in return for approving the merger between the two US aerospace groups Boeing and McDonnell Douglas.

It is thought that the EC, at the request of the four Airbus partners, is seeking to raise the ceiling on repayable launch aid for new commercial aircraft programmes from 33 per cent at present to around 50 per cent. This would allow the Europeans to provide $4.5bn (pounds 2.7bn) of the $9bn Airbus says it will cost to launch its 600-seater super-jumbo, the A3XX.

But it would be fiercely resisted by the US on the grounds that it would give Airbus an unfair advantage in the civil market, where its share is now close to 40 per cent.

According to aviation sources, the stiff opposition Karel Van Miert, the EC Competition Commissioner, has put up to the Boeing-McDonnell merger is designed to act as a lever to force the US to renegotiate the rules governing support for civil aircraft programmes.

Under a bilateral agreement between Europe and the US signed in 1992, indirect support for aircraft programmes - through funding of defence research projects for instance - is limited to 4 per cent of the turnover of an individual company and 3 per cent of the turnover of the entire industry. Direct launch aid is capped at one-third.

But the Airbus partners have long complained that it is virtually impossible to police the indirect subsidies that Boeing and McDonnell Douglas receive through Nasa and the US Department of Defense, which run into billions of dollars.

The EC is now trying to get the 1992 agreement renegotiated. One Airbus source said: "By definition that means we have to look at the ceiling on both indirect and direct support. An increase in refundable launch aid to 50 per cent sounds eminently reasonable."

The US Federal Trade Commission is due to decide whether to approve the Boeing-McDonnell Douglas merger on 1 July. The boards of the two companies, meanwhile have pencilled in 25 July for extraordinary shareholders meetings to vote formally on the merger.

The deadline set by Mr Van Miert for a final decision is 31 July. Meanwhile there were reports yesterday that Boeing has offered to unravel the "exclusive" 20-year supply deals it has agreed with three US carriers - American Airlines, Delta and Continental - in return for EC approval of the merger.

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