US Rep Says Airbus Must Forgo Gov't Help On A350

There may be a "window" of opportunity in the United States' long-running dispute with Europe over development aid for Airbus and Boeing aircraft. In fact, a top US trade official says an agreement on the contentious issue may occur as soon as the end of next summer.

"There's a window that exists to negotiate a settlement on Boeing and Airbus," said John Veroneau, the deputy US trade representative, to the International Herald Tribune.

But -- and you knew there would be one -- Veroneau adds any settlement would require EADS, the parent company of Airbus, to forgo any government-backed financing for its new A350XWB wide-body aircraft.

"We're seeking the elimination of government financing that is not on commercial terms," Veroneau said of EADS, adding "we have a strong interest in not having launch aid replaced as R&D subsidies."

EADS has said it plans to cover the initial phase of the $13.2 billion development program in-house. However, the European consortium hasn't ruled out asking governments with a stake in the program for their help, especially as EADS must keep a close eye on costs in the wake of development woes plaguing the A380 superjumbo.

Representatives with the US and European Union have argued before the World Trade Organization for nearly three years, each stating the other takes unfair advantage of financial support from their representative governments.

Officials in Europe say they're open to talks... but (there's that word again) only if the US reviews financial support and tax breaks given to Boeing.

"It has been clear that the US definition of a negotiation is one that sees the total elimination of launch investment on the Airbus side, but continuation of healthy subsidies for Boeing on their side," said Peter Mandelson, the chief EU trade negotiator, last week.

So, while that "window of opportunity" may indeed be open, it appears there's still a pretty big shade covering the view.

FMI: www.airbus.com, www.boeing.com, www.wto.org