Planemaker Boeing received at least $5.3 billion of dollars of banned U.S. subsidies, the World Trade Organization said Thursday.
The subsidies included banned support in the form of research and development payments from the NASA space agency.
The ruling by a panel of trade judges is the latest round in a six-year battle between the industry's two giants that has spiraled into the world's largest and costliest trade dispute.
A separate WTO trade panel condemned European support for Boeing rival Airbus in a parallel case last year.
Both sides immediately claimed the upper hand in the row, which now extends to 2,000 pages of rulings in the most complex and bitter battle ever brought before the Geneva trade court.
Airbus, part of European aerospace group EADS, said it had lost $45 billion in aircraft sales because of the subsidies.
It's time for Boeing to stop denying or minimizing the massive illegal subsidies it gets, said Rainer Ohler, head of public affairs and communications at Toulouse-based Airbus.
Boeing acknowledged receiving $2.7 billion of illegal U.S. funding on top of a dispute that has already been aired, but said this was dwarfed by more than $20 billion of European aid which it said the WTO had earlier identified at Airbus.
This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing, said Michael Luttig, executive vice-president and general counsel at Boeing.
Boeing says the condemned U.S. aid includes $2.2 billion in tax breaks on exports, which the United States says have already been remedied but which Airbus says must be repaid.
Both sides can appeal the latest findings.
(Reporting by Andrew Callus, Tim Hepher; Editing by Jon Boyle)