Airbus and Boeing clashed over aid for the next generation of European passenger jets on Thursday, while details emerged on the battleground for possibly lengthy appeals following a major trade ruling on aircraft subsidies.

Both sides claimed victory on their favorite points in a 1,000-page ruling handed down on Wednesday by the World Trade Organization, which ordered European countries to withdraw prohibited subsidies to Airbus for its A380 superjumbo.

The WTO also criticized weaker subsidies for other models of Airbus aircraft, but rejected several U.S. negotiating points.

The United States says the ruling showed European Union states must refrain from offering more development loans, at the heart of the dispute, for the future mid-sized Airbus A350.

Boeing also said Airbus should pay back roughly $4 billion in past A380 loans or restructure them to make them commercial.

Airbus rejected both points, saying the panel had neither said how the subsidies should be remedied nor had it tarred the European funding system as a whole, only various specifics.

Boeing's wishful thinking to the contrary, the A350 is untouched by the WTO's findings. Together with the four governments, we are moving forward at full speed, Airbus head of communications Rainer Ohler said.

Airbus typically receives advances from its four founder states -- Britain, France, Germany and Spain -- for plane developments which it says it regularly repays with royalties.

Boeing insisted a legal principle had been set.

Continuing with plans to provide $4-5 billion of taxpayer's money to Airbus for the A350 on anything other than market terms would be not only unacceptable but prohibited by the WTO ruling, spokesman Charlie Miller said.

It really is time Airbus stood on its own two feet. It is a mature company, the biggest producer of commercial aircraft in the world with a cash pile of almost 9 billion euros. It is perfectly capable of financing aircraft development using its own cash and commercial loans.


The United States says the advances contain preferred terms and are illegally tied to exports. The European Union denies this and says the system itself has not been branded unfair.

A lawyer familiar with the European case, who asked not to be identified, disclosed two areas for possible appeal.

He said the WTO had relied too heavily on preamble language in the relevant contracts when it concluded that German, Spanish and British loans for the A380 were prohibited.

It had also, according to the lawyer, wrongly interpreted Airbus forecasts about where the A380 might be sold as a binding commitment to export in return for the public advances.

We think this argument -- the key reason for some of the launch investment to be seen as a prohibited subsidy -- is vulnerable on appeal, the lawyer told Reuters.

The comments give the first indication of possible tactics if, as expected, the EU appeals within 30 days. But they were brushed aside by Boeing which said the WTO had been thorough.

This argument is poppycock, said Robert Novick, a partner at the Wilmerhale law firm representing Boeing in the dispute.

The ruling is based on the entire body of facts in these loan contracts including an exact number of deliveries that could only be reached through exports.

Airbus's Ohler said it was confident of winning any appeal.

The question of whether past subsidies should be repaid is a sensitive area going to the heart of whether WTO decisions have real teeth -- but with no agreed definition, trade lawyers said.

That is because the world's trading partners cannot decide whether paying back old subsidies would violate an equally sacred rule that trading decisions cannot be retroactive. However, Boeing says the A380 loans are still live subsidies.

It is a very complex area. To repay a subsidy would require careful analysis, said a trade lawyer not involved in the case but who asked not to be named to preserve client relationships.

Airbus parent EADS declined to saw how much it received for the A380, but its balance sheet shows 4.8 billion euros of total government loans and analysts say this is mostly for that plane.