Britain pledges funding for Airbus A350

LONDON — The British government pledged 340 million pounds ($562 million) to Airbus today to help develop its A350 XWB aircraft — significantly less than the funding already committed by France and Germany.

Business Secretary Peter Mandelson said the British support for the building of Airbus' new carbon-fiber wide-body aircraft will create more than 1,200 direct jobs and another 5,000 jobs across the supply chain in Britain.

The British, French, German and Spanish governments have traditionally supported new Airbus jet programs via repayable launch funding — with the amount of work allocated to each in return dependent on their contribution.

Rival Boeing and the U.S. government have both objected to the arrangement, claiming it breaches world trade laws.

At the Paris Air Show in June, France said it would provide funding of 1.4 billion euros ($1.94 billion) while Germany pledged up to 1.1 billion euros ($1.52 billion). Spain has not announced a commitment.

Britain has in the past received around 20 percent of the work on a new Airbus jet, specializing in the design and manufacture of wings.

Mandelson said today that the funding will help Britain to strengthen its position as a world leader in wing, landing gear and fuel integration systems technologies and ensure it plays a leading role in the development of the A350 XWB.

Airbus has designed the aircraft to compete with Boeing's forthcoming 787. Both models are more fuel-efficient than aircraft flying today thanks to a greater use of lightweight composite carbon materials.

Airbus CEO Tom Enders confirmed in June that the development costs of the program would be around 11 billion euros, of which 30 to 33 percent could be financed by reimbursable loans from European governments.

"This agreement is further evidence of this government's long-term commitment to the U.K. aerospace industry and its future success," Mandelson said as he toured the Airbus U.K. plant in Filton, in southwest England.

The Society of British Aerospace Companies welcomed the funding announcement, saying the A350 XWB program is extremely important for the future of the domestic industry.

"The significant technological advances of the composite materials being used means that the importance of the A350 program in developing the skills and technology for the future sustainability of the U.K. aerospace industry cannot be exaggerated," said SBAC Chief Executive Ian Godden.

Boeing and the U.S. government have criticized Airbus for seeking state launch aid for the A350, suggesting such financing violates World Trade Organization rules and that EU subsidies have enabled Airbus to capture Boeing customers.

President Barack Obama's trade chief Ron Kirk said in June that the United States would respond "quickly and swiftly" if European nations agreed to subsidize the Airbus A350 jet program.

Kirk said he was "reasonably hopeful" of a ruling from the WTO panel on its existing U.S. complaint against Airbus "as early as the end of August."

The EU counters that Boeing receives U.S. federal and state tax breaks, development funding and grants, as well as large amounts of military contracts.