Airbus says will not change funding for A350

Airbus says will not change funding for A350

Hong Kong: European plane maker Airbus said on Tuesday that it has no plans to change the funding for its A350 wide-body plane, even after the World Trade Organization (WTO) ruled that European loans for the firm were illegal subsidies under world trade rules.

The WTO ruled on Friday that European “launch aid loans" to help Airbus develop the A380 and other top-selling planes violated global rules, according to US lawmakers, but European sources said Washington did not win a sweeping victory..

The findings, which came in a confidential 1,000-plus page ruling, are the latest chapter in a decades-old battle between US manufacturer Boeing and Airbus for dominance of the global aircraft market, a major source of jobs on both sides of the Atlantic.

The WTO finding could limit Airbus’ options to finance new airliners, including the wide-body A350 due in the next decade.

But Airbus has “absolutely no plans to change the funding for the A350 at the moment," Christopher Buckley, executive vice-president for Europe and Asia Pacific, told Reuters in an interview.

“From the Airbus point of view, we strongly believe, like we’ve always done, that reimburseable launch aid is a very good way of launching aircraft programmes," Buckley said.

The Airbus case and the European Union counterclaim about US support to Boeing, the United States’ biggest single exporter, represent the most complex and commercially significant dispute in WTO history.

Washington says Airbus, a subsidiary of EADS, received a $205 billion boost from advantageous loans and other perks from France, Germany, Spain and Britain over two decades, giving it an unfair edge.

Brussels argues the Airbus loans were fair and says Boeing got big illegal subsidies from US agencies including NASA plus state tax breaks worth some $24 billion.

Recovery by 2010

Airbus expects a recovery in passenger and freight traffic volume by 2010, as economies recover and customer confidence returns, Buckley said.

“We are seeing some small signs that customer confidence is coming back," he said. “Hopefully by 2010, the situation will be back to normal."

Earlier, Laurent Rouaud, Airbus’s senior vice-president of market and product strategy, forecasted that worldwide passenger traffic could rise by 4.6% in 2010.

Airbus’s outlook is more bullish than Boeing’s, which said earlier that the global aviation market would recover only in 2011 and return to growth in 2012..

Airbus, which has 147 new orders to date, could see two or three important additional orders by the end of the year, Buckley said, declining to provide more details. The firm is maintaining its 2009 sales target of 300 gross orders, he said.

But the airline industry could see some more consolidation in the coming months, adding that smaller airlines in the United States could feel the brunt in the winter months.

Airbus is not worried that the WTO ruling could affect the $35 billion, 179-plane, US Air Force refueling-fleet deal that EADS, together with its partner Northrop Grumman, hopes to clinch against Boeing, Buckley said.