DOW JONES NEWSWIRES
The World Trade Organization delivered a long-awaited ruling
Friday on government subsidies provided to Airbus that could affect
efforts to challenge the company's near-duopoly with Boeing Co.
(BA) in the large aircraft market.
The WTO was expected to rule that launch aid provided to Airbus
for new aircraft development was illegal, though the European
company said Friday that a final decision could take up to five
years.
Airbus is a unit of European Aeronautic Defence & Space Co.
(EADSY).
However, the confidential findings will be closely tracked amid
efforts in China, Russia and Japan to launch new commercial
aircraft with government assistance.
Boeing had alleged that subsidies to Airbus were illegal,
triggering the complaint from the U.S. government to the WTO. A
parallel complaint against alleged illegal subsidies provided to
Boeing is also before the Geneva-based organization.
Airbus and Boeing dominate the market for aircraft with more
than 100 seats, where financing plays a key role alongside
operating performance in the fierce sales battles between the two
rivals. Cutting the development cost with low-price loans would
reduce the final sale price.
Both companies also tap extensive government sales-financing
support from export-credit agencies, which has also been the
subject of long-running trade disputes.
The same trade friction has been seen in the regional jet
market, which is dominated by Canada's Bombardier Inc. (BDRBF) and
Empresa Brasileira de Aeronautica SA (ERJ), also known as Embraer,
of Brazil.
Bombardier will secure around one-third of the development cost
of its new C-Series aircraft from Canada, the U.K. and the Quebec
government. Embraer said it isn't receiving any government
development aid.
The Chinese government is backing the new ARJ21 regional jet
with partners including General Electric Co. (GE), while Russia's
Sukhoi Design Bureau Co. plans to enter the market with its
Superjet 100.
In Japan, Mitsubishi Heavy Industries Ltd. last year launched
the MRJ regional jet program, and expects to secure one-third of
the development cost from the country's economy ministry.
The WTO confirmed that it issued its first ruling in the U.S.
complaint against Airbus.
"It's been given to the parties," WTO spokesman Keith Rockwell
told Dow Jones Newswires. The content of the ruling is
confidential, and won't be publicly released for "quite some time,"
he said.
The European Commission earlier Friday said it received the
long-awaited ruling. The commission, the E.U.'s executive arm, is
studying the report and declined to comment further.
Airbus said at a media briefing before the release that a final
decision - which could leave the U.S. open to impose sanctions
against the European Union - may take another three to five
years.
Another WTO panel is expected to issue a preliminary report on
the E.U.'s complaint against Boeing in about six months.
Airbus spokesman Rainer Ohler urged an end to the dispute,
saying the only solution would come from the negotiating table.
He said that the company's A350 long-range aircraft, which it is
developing to compete with the Boeing 787 Dreamliner, isn't part of
the dispute.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
(Matthew Dalton, Anita Greil, Monica Gutschi, Alastair Stewart
and Kirsten Bienk contributed to this report.)