Germany Extends €623 million Loan for A350

The German government has issued Airbus an “interest-bearing repayable” loan for development of the A350 worth €623 million ($694 million), the German Federal Ministry for Economic Affairs and Technology (BMWi) confirmed to AIN Thursday. The German Bundestag noted the payment, which represented the second tranche of a €1.123 billion ($1.25 billion) commitment, during a budget committee meeting on Wednesday, said a ministry spokesman. The loan runs until 2031 and covers deliveries of 1,500 airplanes.  

The payment comes at a sensitive time, as the long-running dispute between Boeing and Airbus over their respective governments’ subsidies for expensive aircraft programs took yet another turn with last month’s pledge by the World Trade Organization to establish a panel to examine the legality of $8.7 billion worth of tax breaks for Boeing’s 777X from Washington state.

In a complaint filed in December, the EU claims the Washington state tax incentives violate WTO rules because they require the beneficiary to use domestic goods rather than imported ones. Under the deal between the state and Boeing, the manufacturer must build and assemble the 777X’s wings in Washington state, according to the complaint. Boeing has argued that Washington has made the tax breaks available to any aerospace company, including Airbus and its suppliers.

In a statement to AIN, Boeing called for Airbus to reveal the terms of the latest loan from Germany. "Airbus claims it is now a commercial enterprise, yet it continues to take significant and illegal public sums from governments to finance the development and launch of new products," said the U.S. company. "The WTO has said that government loans to Airbus must be on commercial terms. If Airbus has nothing to hide, it will make the full terms of all its A350 government loans public."

The WTO ruled in 2010 and 2011 that the U.S. and European Union each had violated international trade agreements with their respective grants to Boeing and Airbus of billions of dollars in subsidies. The WTO rejected appeals by each side in 2011 and 2012.

Now, the sides await a new ruling by the WTO, expected this year, on whether each has complied with the body’s ruling to desist.