French turn up the heat in Airbus row

The French have agreed to lavish hundreds of millions of euros worth of aid on Airbus in a move that will further inflame the transatlantic row over airline subsidies.

The French have agreed to lavish hundreds of millions of euros worth of aid on Airbus in a move that will further inflame the transatlantic row over airline subsidies.

The news comes less that a week after Boeing and Airbus lodged legal action at the World Trade Organisation, accusing each other of having received illegal state aid.

The French government is understood to have told Airbus last month that it will offer so-called launch aid for the development of its new mid-range A350. The fuselage, flight deck and aircraft systems will be developed in France.

Airbus refused to say how much it had asked for, but industry sources said that it was between €250m and €400m (£170m and £270m).

Airbus has also lodged claims with the British, German and Spanish governments for aid towards the €4bn cost of developing the new aeroplane. It has indicated that it wants to secure aid agreements in time for the Paris airshow, which begins a week tomorrow.

Whitehall sources said that the Department of Trade and Industry wants to grant Airbus's aid request for what is understood to be £389m. This will ensure that the A350's carbon fibre wings are built in Broughton, north Wales.

However, there are indications that the DTI's announcement will not be made before the Paris airshow.

One source close to the negotiations said: "As a country we should be investing in success rather than throwing money at industries that are failing."

This week, Tony Blair will come under renewed pressure over the aid issue.

David Hanson, MP for Delyn; Kerry McCarthy, MP for Bristol East; Doug Naysmith, MP for Bristol North West, and Mark Tami, MP for Alyn & Deeside, will meet the Prime Minister and urge him to offer Airbus the subsidy.