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Airbus parent approves plans for A350 plane

Airbus parent European Aeronautic Defence and Space Co. approved plans Thursday to build the new Airbus A350 plane, designed to rival Boeing Co.’s 787 Dreamliner.
The parent of Europe’s Airbus approved plans Thursday to build the new Airbus A350 plane — a rival to Boeing’s fuel-efficient 787 Dreamliner.
The parent of Europe’s Airbus approved plans Thursday to build the new Airbus A350 plane — a rival to Boeing’s fuel-efficient 787 Dreamliner.Airbus via AP file
/ Source: The Associated Press

Airbus and its parent company, EADS, launched a program to build a plane to rival Boeing’s 787 on Thursday but agreed to put government aid on hold as Europe and the U.S. try to resolve their trade dispute on aircraft subsidies.

European Aeronautic Defence and Space Co., which owns 80 percent of Airbus, gave the go-ahead to build the mid-sized A350 plane at a board meeting in Amsterdam. Britain’s BAE Systems PLC, which owns the remaining 20 percent, also approved the launch.

“With the official industrial launch of the A350, Airbus will now be able to book firm orders and expects around 200 of these by the end of the year,” EADS said.

The launch of the A350 program had initially been planned earlier this year. Airbus said in June that the trans-Atlantic trade row had delayed the decision.

European Union and U.S. negotiators are trying to work out a settlement to the dispute, which began last year when Washington tore up a 1992 pact on aircraft subsidies and filed a World Trade Organization complaint against EU government aid to Airbus.

Brussels retaliated in a countersuit citing tax breaks and research and development subsidies to Chicago-based Boeing and its suppliers, including Japanese companies working on the 787 Dreamliner, due to enter service in 2008.

Airbus has applied for about 1.5 billion euros ($1.8 billion) in funding from France, Germany, Britain and Spain toward the estimated 4.4 billion euro ($5.3 billion) cost of the A350 program. Under pressure from Washington, however, the four governments have stopped short of committing public funds to the A350 program.

EADS said all four governments had “responded favorably” to Airbus’ funding applications, adding that “Airbus, EADS and BAE Systems have decided that no disbursement should take place throughout 2006” while trans-Atlantic negotiations continue.

But a British government spokesman said in an interview that London had so far made no funding pledges to the A350 program.

“We haven’t given anybody any money and we’re still deciding whether we will,” said James Thomson, spokesman for the Department of Trade and Industry. “We’re still looking at whether we are going to provide any kind of repayable launch investment to Airbus.”

Thomson added: “The four Airbus governments have agreed that no financial support will be paid to Airbus as long as there is a credible prospect of negotiations with the U.S.”

French Transport Minister Dominique Perben said in an interview with financial daily La Tribune that France had agreed “in principle” to provide funding but that the funding application is still “in the process of being examined.”

U.S. Trade Representative Rob Portman had warned EU governments that any commitment of funds to the A350 program would complicate efforts to negotiate a broader compromise on aircraft subsidies.

Peter Power, spokesman for EU Trade Commissioner Peter Mandelson, said “no such launch investment has been put in place for the A350, although there is general support for the plane.”

He added: “This helps a possible negotiation in the dispute with Boeing, which we would welcome.”

But Portman’s office reacted angrily to the A350 launch. “It’s clear that the EU countries are unwilling to stop subsidizing Airbus. Therefore, we will continue to push ahead with our WTO case,” spokeswoman Christin Baker said in an e-mailed statement.

Boeing had no immediate comment about the Airbus launch.

But Jim Condelles, a spokesman for Boeing’s commercial airplane unit in Seattle, said, “We’re certainly not surprised. We’ve been anticipating this. The question for us is why it took so long for them to react to the 787.”

He said Boeing has had 273 orders for the Dreamliner and commitments from 23 customers.

Rolls-Royce Group PLC also announced Thursday it had reached a deal with Airbus to supply engines for the A350. Its new Trent 1700 engine will be available for deliveries from mid-2011, the company said.

Airbus plans to begin commercial deliveries of the long-range, fuel-efficient A350 in 2010, with engines first developed for the Dreamliner by General Electric Co.