Boeing blasts Airbus in subsidy row

Boeing last night accused European governments of handing Airbus billions of taxpayers' euros towards the launch of its new A350 airliner. Above, workers on Boeing's 777 assembly line in Everett, WashShow more

Boeing, the US aerospace giant, has launched a blistering attack on Airbus for continuing to take "illegal" and "pernicious" European state subsidies.

In the latest round in a long-running trade war between the two companies, Boeing issued a statement last night accusing European governments of handing Airbus billions of taxpayers' euros towards the launch of its new A350 airliner.

And this latest broadside could disrupt the proposed US$48.7bn (Dh178.87bn) tie-up between the Airbus owner Eads and BAE, which is a major supplier to the American military.

The Boeing statement followed a declaration by the US government that it had complied with a ruling from the World Trade Organisation (WTO) in March that Boeing had received at least $2.6bn in illegal government subsidies in the form of US research and defence contracts.

Airbus and Boeing dominate the $70bn-a-year aerospace market, and both companies and their respective governments have been locked in a legal battle at the WTO since 2004 over subsidies.

In yesterday's statement, Boeing said it supported US government actions to "address the relatively small amounts of subsidy that the WTO identified as inconsistent with its rules."

It went on to claim that the EU and Airbus had "thumbed their noses at the WTO", by continuing to provide launch aid for the A350.

"The illegal subsidies to Airbus, most importantly the pernicious, market-distorting practice of launch aid, must stop," Boeing said.

US trade officials had alleged that "launch aid as granted by EU member states, for every Airbus plane launched over the last 40 years, was contrary to WTO rules".

The WTO agreed and ordered the EU to end illegal subsidies for Airbus last year.

In response last December, the EU listed 36 compliance measures it had taken in regard to six Airbus models: the A300, A310, A320, A330, A340 and A380.

No mention was made of the A350, the carbon-fibre jetliner due to enter service in the first half of 2014 in competition with Boeing's 787 Dreamliner.

Following Boeing's statement, a US trade official said state subsidies at Airbus would be one important consideration when the committee on foreign investment in the US scrutinises the merger proposals between the Airbus owner and BAE.

"Eads are looking for business here in the US when they have received illegal subsidies and are refusing to comply with the WTO," said the official. "You have to ask if that is really fair. It is a key issue."

BAE's chief executive, Ian King, has said he will not go ahead with the merger if he believes it will jeopardise business in the US.