EADS Chief Executive Louis Gallois on Saturday slammed arch-rival Boeing's propaganda campaign over a World Trade Organization panel ruling and said it was a sign of fear ahead of a decision on a hotly contested U.S. aerial tanker contract.

Gallois also said it was likely that the European Union would appeal against Wednesday's WTO panel ruling, which was critical of EU export subsidies to EADS-owned Airbus.

(Boeing's) propaganda campaign over the past three or four days shows they are scared that we will have a competitive offer for the tankers, Gallois told reporters on the sidelines of a conference in Aix-en-Provence.

EADS and Boeing are locked in a fierce battle for a contract of 179 refueling planes to replace the aging U.S. fleet of Boeing-built KC-135 tankers, which are nearly 50 years old on average.

U.S. lawmakers backing Boeing have called for the tanker competition to factor in the WTO ruling, which said EU export subsidies to Airbus had hurt Boeing and must be scrapped.

But Gallois said that 70 percent of Boeing's complaints had been rejected by the WTO and that Boeing had not proved that export subsidies to Airbus had directly affected its competitiveness or employees.

He also noted there was a second WTO panel ruling due on July 16 on a countersuit by the EU over U.S. support for Boeing.

It seems likely to me that (the EU) will appeal (the first ruling), Gallois said.

EADS will submit its tanker offer either on Thursday or Friday, in partnership with U.S. firms where sensitive defense equipment is concerned, he said.

A350 FEARS

Gallois also sought to scotch press speculation that the WTO panel ruling was pushing EADS to review EU launch aid for its Airbus unit's A350 airliner.

I do not expect changes to the conditions (of launch aid), he said, reaffirming that government loans for the A350 XWB program were not contrary to WTO rules and that the financing of the A350 program was legal in the WTO's view.

A Boeing lawyer has argued the WTO panel ruled government launch aid for Airbus airliners was illegal and that this applied to the forthcoming A350 -- a challenger to Boeing's 787 Dreamliner and 777 planes.

EADS' view is that A350 launch aid is not in the remit of the WTO panel ruling and that it does not need to be changed.

When asked whether EADS could take action against Boeing's statements on the WTO ruling, Gallois declined comment.

(Reporting by Matthias Blamont and Lionel Laurent; Editing by Susan Fenton)

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