Gang of four flout WTO to subsidise Airbus A350

Posted on 20 Jul 2010 by The Manufacturer

The European countries behind European aerospace company EADS will continue to subsidise Airbus’s A350, despite recent WTO rulings questioning the legality of similar subsidies.

Governments of the four countries – Britain, France, Germany and Spain – will provide reimbursable subsidies to help Airbus continue to develop its wide bodied A350 project, senior ministers from the UK and France said on Monday.

This is despite the World Trade Organisation’s findings against previous state payments to the plane-maker, where the WTO ruled in early July that subsidies paid by European member countries to Airbus for the A380 were illegal. The statement was made at a meeting of business ministers from the four countries on Monday at the opening of the Farnborough International Airshow 2010.

Dominique Bussereau, France’s state secretary for transport, said that “the French government will be committed to important reimbursable subsidies to the Airbus A350.” France has already committed Eu1.4bn in state lending to the project.

Bussereau added: “the principle of reimbursable subsidies is not contrary to WTO rules.” Business minister Mark Prisk said: “The previous government had committed to subsidies of £340m to develop and support the A350 in the UK and there is no intention to withdraw that commitment.” He confirmed there had been no request from Airbus or its parent, EADS, to increase that sum.

The funding package for the A350XWB, which competes directly with Boeing’s new Dreamliner 787, breaks down as: the UK, £340m; France Eu1.4m in subsidies; Germany Eu1.12 billion, and Spain Eu332m.

Airbus’s A350 is expected to cost Eu11bn to develop, which compares with Eu96bn for its bigger sister, the A380. The A350 expects to begin delivery to airlines from 2013.

Boeing’s 787 Dreamliner is debuting at the airshow for the first time outside the United States.
On July 6th, the World Trade Organisation settled one side of a six-year argument between rivals Boeing and Airbus by ruling that state aid given over several years to Airbus by EADS countries was illegal.
Airbus has filed a similar complaint to the WTO against Boeing, claiming the US government subsidises the aerospace company. A decision from the WTO is expected in August.

The WTO’s ruling on the legality of alleged US subsidies to Boeing was supposed to come out on July 16, but it was delayed to September. Mark Prisk said the UK government was pushing for a WTO resolution on Boeing’s support by then and would be “deeply disappointed” were the decision further postponed.

The previous UK government approved its £340m boost to Airbus in August 2009, where it expected the loan to create and sustain more than 1,200 jobs at Airbus UK’s Filton and Broughton plants. At the time, ministers hoped it would help create and sustain more than 5,000 jobs within the supply chain across the UK.