Airbus seeking $5 billion in state loans for A350

Airbus is seeking as much as 3.6 billion euros ($5 billion) in loans from four European governments to help fund its A350 long-range aircraft, two people familiar with the plan said.

The loans from France, Germany, Spain, and possibly Britain, will account for 30 percent of the plane's development costs, said the people, who asked not to be identified because the talks are confidential.

The aircraft, designed to seat as many as 350 passengers, is to enter service in 2013.

The A350 will compete with Boeing's new 787 Dreamliner and the bigger 777 model, which carries as many as 368 passengers.

Loan commitments may reignite a trade dispute between the European Union and the U.S. over subsidies for plane makers.

The two governments filed dueling complaints with the World Trade Organization in 2004 about aid to aerospace companies. A ruling is expected in the coming year.

"We would hope that Airbus and the EU member states would not take such action on the eve of the WTO decision," Ted Austell, Boeing's vice president for public policy, said in a statement. "We can only reiterate our position that Airbus should finance its aircraft development using its own cash and commercial loans."

Government ministers representing the main countries where Airbus has factories — France, Germany, Spain and Britain — are to meet June 15 at the Paris Air Show to discuss the loans to Airbus.

The governments have given the ministers the approval to work out an agreement, though it's not certain whether a final accord can be reached by that date, the people said.

Britain is still considering whether to contribute its share, one of the people said.

Franck Louvrier, a spokesman for French President Nicolas Sarkozy, declined to comment, as did a spokesman for German Chancellor Angela Merkel.

A spokesman for Britain's Department for Business, Enterprise and Regulatory Reform, which oversees state-aid questions, had no immediate comment.

In Spain, a spokesman for Prime Minister José Luis Rodríguez Zapatero couldn't immediately be reached for comment.

Stefan Schaffrath, a spokesman at Airbus headquarters in Toulouse, France, said no decisions have been taken.

"We're looking to all kinds of options to achieve a level playing field with Boeing," he said.

Traditionally, Airbus gets about a third of development costs from European governments in the form of loans.

Boeing and the U.S. government contend Airbus is getting unfairly subsidized when it accepts state lending. They argue that the loans are not at commercial rates.

Airbus and European governments say the company is paying back loans, and that past aid was allowed under a 1992 bilateral agreement.

Airbus also says it has repaid 40 percent more than it's borrowed from EU governments since 1992.

The European Union's filing with the WTO in March 2007 argues that Boeing benefits from research work reimbursed by NASA and the Department of Defense at no cost for technologies used in the 250-seat 787 Dreamliner.