Eurofighter and Boeing on the attack

Eurofighter and Boeing are using the start of the Farnborough Air Show today to highlight bitter disputes with European governments.

Eurofighter and Boeing are using the start of the Farnborough Air Show today to highlight bitter disputes with European governments.

Failure to reach an agreement over the next tranche of funding for Eurofighter, Europe's biggest defence project, could cost up to €2bn (£1.3bn) as well as thousands of jobs, according to executives involved with the scheme.

A deadline for securing a new round of funding from the four countries behind Eurofighter - the UK, Germany, Italy and Spain - is currently set for the end of this month. But the UK is believed to be holding up an agreement over concerns that the price of the project is again rising too high. Speaking at the weekend, Tom Enders, the chief executive of EADS - one of the three main manufacturers involved - said a disruption of the €83bn programme because of funding problems posed a "serious threat" with thousands of jobs at risk.

Meanwhile, Boeing has redoubled its attack on the subsidies received by its European rival Airbus, saying the 1992 accord governing support for large commercial aircraft programmes should be scrapped and replaced by a new bilateral agreement. Alan Mulally, the president of Boeing's commercial aeroplane division, said the accord had not been complied with and had failed in its purpose, which was to phase out state aid.

He said Airbus had received $15bn (£8.3bn) in support from its four sponsor governments - Britain, France, Germany and Spain - and that had distorted the commercial aircraft market. "Airbus now has 50 per cent of the market so why is the EU continuing to subsidise the launch of new aircraft?" he said. "We are very keen to agree a new bilateral which removes distortions in the market."

Boeing is particularly concerned that Airbus might seek further launch aid to develop a rival to its new 7E7 jet, which enters service in 2008.