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UPDATE 1-WTO to rule on EU, US Airbus case on Sept. 4-sources

Published 08/25/2009, 01:44 PM
Updated 08/25/2009, 01:48 PM
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(The following story contains no dateline to protect the sources of the information)

* WTO judges to rule on EU launch aid for Airbus on Sept. 4

* Mixed ruling seen favouring both sides on different points

* Confidential report to be given to EU, U.S. in Geneva

* Ruling in Boeing aid case expected within six months

(Adds details and background)

Aug 25 (Reuters) - The World Trade Organisation is expected to deliver a mixed ruling next week in the U.S. case against EU launch aid for Airbus allowing both sides to claim victory, sources with knowledge of the case said on Tuesday.

The preliminary ruling is expected to be followed in the next six months by a WTO decision in a countersuit brought by the European Union over U.S. support for Boeing airliners.

Brussels and Washington have been embroiled in a bitter multi-billion-dollar transatlantic dispute over subsidies given to the world's top two plane makers hit by the worst economic crisis in nearly 80 years.

"The WTO report will be handed over to EU and U.S. diplomats in Geneva on Friday, Sept. 4," a source told Reuters on condition on anonymity.

"The ruling will be handed over to officials from Brussels and Washington at around 1600 GMT, but will not be made public."

In the first half of this year Airbus sold 90 planes, and received 22 cancellations.

But that still leaves the European manufacturer far ahead of U.S. rival Boeing, whose 85 new orders in the first half stand against 84 cancellations caused by a slump in demand from airline companies rocked by a huge fall in demand for flights.

MIXED RULING

Sources said it was still unclear how the panel of WTO judges would rule next week and said they expect both sides to be successful on a number of the points being argued in the case which began in 2005.

"One thing is certain. It will be complicated and most likely mixed," a second source said.

"The devil will be in the detail. The U.S. can expect to win on a number of points, but lose on some other areas."

If the U.S. administration and Boeing are successful, the decision could prevent EU governments from sinking further launch aid into Airbus -- a subsidiary of EADS -- for its new 11 billion euro ($15.72 billion) A350 airliner.

French and German ministers discussed possible government loans for the A350 at the Paris air show in June, and Britain has also made an offer of financing. New U.S. Trade Representative Ron Kirk has made it clear that Washington would challenge such aid at the WTO.

Both sides argue that the industry, in which governments play a big role, needs clarification over what counts as illegal subsidies, especially as new entrants such as Canada's Bombardier and Chinese manufacturers are planning to compete in the long-haul aircraft market. (Reporting by Reuters bureaux, editing by Alison Williams) ($1=.6997 Euro)

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