Britain's 340 m Airbus bailout roils the US

Lord Mandelson, Business Secretary, drew rebukes from US officials after announcing that the UK government will help fund the construction of the rival to the Boeing Dreamliner.  The £340m loan towards building wings for the A350 will secure more than 1,200 jobs at plants in Filton, near Bristol, and at Broughton in north Wales.

Lord Mandelson denied that the loan constituted a naked state subsidy and described the ongoing legal row between the US and the EU as “senseless.”

He said: “This is neither a bailout nor a subsidy, we’re not sinking money from which we’ll never see a return. This is a first-rate investment in British engineering expertise.”
However, the Office of the United States Trade Representative, which negotiates trade agreements on behalf of the US president, slammed the move. The US has brought a case against the EU at the World Trade Organisation, which is expected to deliver preliminary findings on alleged multibillion euro subsidies to Airbus over the next month.

EU countersuit

The EU has launched a countersuit, claiming that Washington backs Boeing with substantial payments, with Airbus alleging that $5bn (£3bn) of Federal cash has been invested in the Dreamliner project alone.

“The commitment of launch aid, or any other form of preferential financing, by any of the EU member states would be a major step in the wrong direction,” said the USTR. “We want to resolve the problem of WTO-inconsistent aircraft subsidies, but the commitment of additional support would make that even harder.”

Mandelson, who launched the counterclaim against the US government when he was European trade commissioner, said Washington and Brussels had become embroiled in “senseless tit-for-tat” disputes. “I did not welcome it, or seek it, but it was inevitable once the Americans started down this course,” he said.

Boeing said it was “disappointing” that EU states were investing vast sums in the A350 programme ahead of the WTO announcement. The A350, which has received nearly 500 orders from 30 customers, has received support worth €1.1bn from Germany and €1.4bn (£1.2bn) from France.

“Airbus should finance its aircraft development using its own cash and commercial loans,” said a Boeing spokesperson.

A spokesperson for Airbus said the company needed state backing to compete with its American rival. Airbus has plants in Germany, France, Spain and Britain and is owned by EADS, whose shareholders include the French and Spanish governments as well as German car manufacturer Daimler.

“The objective is to achieve a level playing field,” he said.