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Trade battle between Airbus and Boeing unlikely to be resolved

Airbus official reports, the ongoing trade battle between Airbus and Boeing Co. is "bad for the industry" but is unlikely to be resolved until the U.S. Air Force awards a $40 billion (EUR28 billion) contract for tanker aircraft.

"I don't think it's going to happen," Airbus North America Chairman Allan McArtor told reporters Thursday when asked about efforts to resolve a pair of pending cases before the World Trade Organization involving the two firms.

McArtor described the dispute between his firm, which is a unit of European Aeronautic Defence & Space Co. NV, and Boeing as a "waste of time and resources."

"Government support to this industry on both sides of the Atlantic is part of the DNA," McArtor said. "You ask the question, 'Why are we still doing this?"'

McArtor said he would prefer the two companies, along with U.S. and European trade officials, negotiate a settlement of the WTO complaints. But, he said, that step is unlikely because of the attention surrounding the decision on the tanker program.

The U.S. Air Force is set to replace its fleet of air refueling tankers, setting off a fierce competition between Boeing and a partnership of Airbus and Northrop Grumman Corp. The contract is expected to be awarded by the end of the year.

In response to McArtor's comments, a coalition of minority labor groups expressed concern Thursday about the potential for Airbus to be awarded the contract.

"We are strongly opposed to the outsourcing of defense jobs," said Gabriela Lemus, executive director of the Labor Council for Latin American Advancement.

Her group, along with the League of United Latin American Citizens and the A. Phillip Randolph Institute, issued a joint statement accusing EADS of "anti-competitive business practices."

McArtor said the Air Force decision could clear the way for trade officials to settle the two WTO complaints between the U.S. and European Union over government subsidies to the firms. Describing the WTO process as "not as precise as you might think," McArtor said any major movement on the cases was unlikely until after the first of the year.

Boeing spokesman Tim Neale said his company is open to discussions with its rival, but that the subsidy issue needs to be addressed.

"We're certainly willing to negotiate and talk about anything they want to put on the table, but practices that are WTO-inconsistent need to stop," Neale said.

Shares of Chicago-based Boeing rose $1.35, or 1.41 percent, to $96.94 Thursday.

McArtor also declined to comment on reports that the manufacturer had reached a deal to sell an order of its A350 airplanes to International Lease Finance Corp. He did say ILFC is "very comfortable" with the design of the A350, and that Airbus would welcome any contract between the two firms.

"I would be thrilled if we could get something cooking with ILFC," McArtor said.

Separately, McArtor also discussed the potential entry of China into the commercial air market, which is dominated by Airbus and Boeing. Noting the massive demand within China for commercial aircraft, McArtor said there is little doubt that Chinese corporations will compete for market share.

"They will for sure be in our market. It may take a couple of decades, but they will be in our business," McArtor said.

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