PARIS – European governments have blinked first in an aircraft subsidies dispute with the United States, agreeing to withhold funding commitments for a new Airbus plane set to be launched today while negotiations continue.
As Airbus parent European Aeronautic Defence and Space Co. prepared for a board meeting at which it was expected to give the green light for the A350 jet, officials said no government funding promises would be announced with the launch.
“The deployment of possible aid will not be immediate,” French Transport Minister Dominique Perben said in an interview with financial daily La Tribune, published in the paper’s editions today.
France has agreed “in principle” to provide funding, Perben said, but the proposal is still “in the process of being examined.”
Washington filed a World Trade Organization complaint last year against European government subsidies to Toulouse, France-based Airbus, and the EU countersued citing subsidies to Chicago-based Boeing Co.
Europe’s conciliatory move follows warnings from U.S. trade representative Rob Portman that any government aid pledged to the A350 – designed to rival Boeing’s long-range, fuel-efficient 787 – would jeopardize attempts to broker a compromise.
“Although we remain open to a negotiated solution to this issue, our negotiations will become much harder if the U.K., or any other EU member state, commits subsidies for the A350,” Portman’s spokeswoman, Christin Baker, said in a statement.
But a spokesman for Portman’s EU counterpart, Trade Commissioner Peter Mandelson, dismissed suggestions that the move would be seen as a European retreat.
“It’s an example of Europe’s continuing wish to be constructive,” Peter Power said. “The European Commission continues to believe that there is a prospect of a negotiated solution to the dispute over civil aircraft subsidies.”
EADS refused to comment on today’s board meeting or the expected launch of the A350 – when Airbus gets the go-ahead to begin taking firm orders for the plane, slated to enter service in 2010.
But spokesman Rainer Ohler said the company’s two joint-chief executives had “made it very clear that EADS is going to be very flexible” on government launch aid. “We would never create a situation in which a negotiated solution would be excluded,” Ohler said.
Airbus spokeswoman Barbara Kracht also played down the significance of a decision to launch the A350 without firm government funding pledges.
“We have launched planes in the past where things were not finalized at the time of launch,” Kracht said. She declined to say when Airbus now expected a final decision on launch aid.
Airbus has applied for about 1.5 billion euros ($1.8 billion) in funding from its supporting governments toward the estimated 4.4 billion euro ($5.3 billion) program cost.
Airbus getting turbulence on A380, A350 fronts
* U.S. and European officials disagree on safety hazards caused by Airbus’ A380 superjumbo.
The Wall Street Journal
The Airbus A380 superjumbo jet, which already has left a trade dispute in its wake, may spark a new trans-Atlantic rift over potential safety hazards created by the actual wake from its engines.
The latest disagreement brewing between U.S. aviation officials and their European counterparts is focused on international standards under discussion concerning how far other airliners should fly behind the superjumbo during takeoffs and landings.
Such rules are intended to provide adequate protection from the powerful turbulence churned up by the A380’s huge wings and four mammoth engines. The A380 – slated for delivery to its first customer in late 2006 – is designed to carry about 800 passengers and represents Airbus’s bid to dominate the market for long-haul travel.
In addition, officials at Airbus, which is 80 percent owned by European Aeronautic Defence &Space Co. and 20 percent owned by Britain’s BAE Systems PLC, are privately fuming about separate U.S. moves aimed at spelling out how fast the A380 will be permitted to maneuver while on the ground – restrictions never imposed before on any commercial aircraft.
The debate is supposed to be entirely about safety, but industry officials and even some participants worry that ongoing trade disputes between the U.S. and Europe threaten to escalate the matter. The two sides are sparring over aircraft subsidies before the World Trade Organization, sparked in part by European aid for the A380. Some European aerospace officials suspect the proposed rules could be used to discourage purchases of the A380. Some U.S. officials, meanwhile, fear that perception could complicate negotiations over both the trade dispute and the aviation safety issues.
Some tension is expected whenever new aircraft are introduced. Scrutiny of wake-turbulence issues has prompted “some sporty discussions” with U.S. regulators, said Charles Champion, Airbus’ chief operating officer and the head of the A380 program. “In some areas, they can make life difficult. If you ask Boeing, I’m sure they would say the European authorities make their life difficult.”
The A380 has a maximum takeoff weight in excess of 1 million pounds, nearly one-third more than the heaviest 747s. Even an additional minute or two of spacing behind some planes can affect traffic flows during peak periods at large airports. Extra time getting the largest Airbus model to and from gates, or slightly longer waits for aircraft following it on the same runway, eventually could make the big planes economically less appealing.
When an airborne aircraft runs into another plane’s wake – the twin cones of turbulent air that fan out from the wingtips of a big jet – the impact can jostle the trailing plane. In extreme circumstances, the result can even be loss of control. There haven’t been any recent crashes of jetliners attributed primarily to such wake encounters, though over the years some business and private planes have experienced serious incidents and even crashed after following a larger aircraft too closely near an airport.
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