Airbus A350 In Doubt As EU And US Continue Air Wars

The future Airbus A350 aircraft remains in doubt until the EU and US can reach agreement over aircraft subsidies to Airbus and Boeing.

The Airbus A350, which is designed to rival Boeing's 787 Dreamliner, could be the first victim of the lengthy dispute between the European Union and the United States over state aid to the aeronautics sector.
The United States has bitterly opposed European plans to subsidize the A350 and has threatened to seek arbitration by the World Trade Organization (WTO) if the EU allows aid to the project before the end of bilateral negotiations.
An Airbus spokeswoman, when questioned about the date when Airbus would seek state aid for the A350, said: "For now, everything is suspended. Everyone is in a holding pattern."
And the Commission spokeswoman sidestepped a report in Monday's Financial Times that the EU had offered to delay launch aid for the A350 to avoid what would be the biggest battle in the WTO's history.
"If Airbus makes a request to (EU) member states for launch investment this is for member states to consider," she said.
Brussels and Washington failed to meet their self-imposed deadline to achieve a negotiated agreement on subsidies to Boeing and Airbus.
However, both sides said they were willing to pursue talks.
The United States has bitterly opposed European plans to subsidize the A350 and has threatened to seek arbitration by the World Trade Organization (WTO) if the EU allows aid to the project before the end of bilateral negotiations.
The situation has stymied the European aircraft maker, which intended to ask its four participating countries -- Britain, France, Germany and Spain -- for aid to finance the A350. The project cost is estimated at four billion euros (5.19 billion dollars).
The new member of the Airbus family was approved by Airbus shareholders European Aeronautic Defence and Space Company, which owns 80 percent, and BAE Systems of Britain, with a 20 percent stake.
The A350 project has become a crucial battlefield in the Airbus-Boeing conflict. The twin-engine, long-haul plane is aimed at competing with Boeing's planned fuel-efficient 787 Dreamliner, which the US company hopes will help it regain the top spot in global commercial aviation.
The market segment for planes with 245-285 seat capacity is promising. More than 3,000 units of this type are due to be retired in the next 20 years, according to Airbus, which forecasts it will sweep up half of the market with its A350. The A350 is planned to enter service in 2010.
But the transatlantic dispute, by effectively freezing the aid that Airbus counts on, seems to be discouraging potential clients -- at the profit of its competitor.
The Toulouse, France-based aircraft maker, which was aiming for 50 firm A350 orders by June, has only won 10 so far, from Spanish airline Air Europa.
Meanwhile, Boeing has benefited from the situation. The US group has harvested 203 firm orders and commitments for its 787, planned to enter service in 2008.
That number includes a deal announced Monday by South Korean flag carrier Korean Air for 10 firm orders for the 787, and options to buy 10 more, valued at 1.3 billion dollars.
Analysts believe that even if the EU-US dispute grounds the A350 for now, it will not prevent the project from finally taking off.