Unrepentant Airbus seeks further launch aid

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The Independent Online

Airbus inflamed the transatlantic trade dispute with Boeing yesterday by declaring that it would apply for up to €1bn (£690m) in launch aid for its proposed A350 jet, even though it could comfortably finance the new aircraft from its own resources.

Airbus inflamed the transatlantic trade dispute with Boeing yesterday by declaring that it would apply for up to €1bn (£690m) in launch aid for its proposed A350 jet, even though it could comfortably finance the new aircraft from its own resources.

Noël Forgeard, the chief executive of the European plane maker, said that the 250-seater aircraft would cost €2bn to €3bn to build and could be in service by 2009 if Airbus gave the go-ahead for its development around the turn of the year and authorised its industrial launch around the middle of next year. It would compete directly with Boeing's 7E7 Dreamliner, due to enter service a year earlier.

In comments which are likely to incense his American rival, M. Forgeard said: "The A350 is easily financeable by Airbus without launch aid because it is a derivative of an existing aircraft, but as long as there is refundable launch aid available we will apply for it."

The US government last week terminated a 1992 agreement with Europe allowing state aid of up to 33 per cent for large commercial aircraft and filed a complaint with the World Trade Organisation over the $15bn (£8.4bn) in launch aid which Airbus has received from its four sponsor governments - Britain, France, Germany and Spain. Europe immediately responded by filing its own complaint over the $23bn of support which it claims Boeing has received from federal and state governments in the past 12 years.

The two sides have two months from the date of filing to see if they can reach a settlement but if the dispute goes to a full WTO panel hearing and appeal it could drag on for a further 15 months.

M. Forgeard stressed that the dispute would not affect the timing of any decision to launch the A350, saying it would be determined solely by market demand. The aircraft will be a derivative of the existing A330-200 aircraft but with new engines and an extra 1,000-mile range, enabling it to fly up to 7,500 miles with 245 passengers.

The Airbus chief said the main casualties of any trade war over subsidies would be US suppliers with which the European aircraft manufacturer spent $6bn a year. M. Forgeard claimed that the first victim of the dispute had already been the American engine supplier General Electric, which had lost out to Rolls-Royce on a $1bn order to power All Nippon Airways' fleet of 50 7E7s. M. Forgeard said that because Japan was already heavily involved in subsidising the airframe of the 7E7 it did not want to risk being sucked further into the dispute by buying American engines as well.

Airbus puts the market for a new fuel-efficient long-range jet with a seating capacity of 200 to 250 at only 1,800 over the next 20 years compared with Boeing's estimate of 3,500. John Leahy, Airbus's chief commercial officer, said that he calculated the A350 could pick up a third of that.

Separately, M. Forgeard said he was confident of signing up his first Chinese customer for the A380 super-jumbo by the end of the year with an order for about five aircraft.

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