Airbus has asked Britain to provide nearly £400m to launch a new aircraft, the A350. The company has received assistance before. Britain has helped to fund most Airbus projects. It stumped up £530m to design and build the wings for the A380, the super-jumbo that made its first flight last month.

But with the A350 the stakes are high and the time short. Airbus has asked ministers to make up their minds within a few weeks, ideally by the start of the Paris Air Show on June 13, when the manufacturer plans to make a splash by announcing orders for 100 of the new planes from four airlines.

If a green light is not given, there is a thinly veiled threat that Britain’s Airbus operations, which employ 13,000 people and support the jobs of an estimated 70,000 more, could be passed over and the work given to factories on the Continent. The groundbreaking composite wings for the A350 might be made not in Broughton, where all current wings are produced, but in Germany or Spain, whose governments are eager to win high-tech manufacturing work and are not reticent about providing launch aid.

If that were not enough, there are even bigger issues riding on the decision. A cash injection would provoke the mother of all trade battles with America, which has long opposed European aid to Airbus. Peter Mandelson, European trade commissioner, has reached stalemate with Rob Portman, his American counterpart, in talks that were aimed at defusing the row. Last week trade officials in Washington said that if the British, French, German and Spanish governments approved taxpayers’ cash for the A350 as requested, America would immediately start litigation at the World Trade Organisation (WTO) for alleged breaches of a 1992 agreement that limits aid to aerospace companies.

Boeing, Airbus’s deadly rival for the past 30 years, also has an enormous amount riding on the European governments’ deliberations. The A350 has the potential to be a spoiler to its new aircraft, the 787.

After years of losing market share — and finally market leadership — to Airbus, Boeing’s reputation hit rock-bottom last year after a series of corporate scandals involving some of its top executives.

Since then, despite having lost chief executive Harry Stonecipher, it has slowly clawed its way back into the game, led by strong sales of the 787. The 250-seat jet has racked up an impressive 261 orders from 21 airlines, with more likely to come at the Paris show. A government-assisted launch for the A350, an aircraft designed specifically to harm the 787’s commercial fortunes, would be a blow for the American aerospace giant.

During the next fortnight there will be a furious lobbying battle in Whitehall. Airbus, MPs with constituencies close to its plants, and powerful trade-union leaders are pulling out all the stops in an attempt to convince the cabinet to give launch aid. John Wall, Amicus’s national officer for aerospace, said the government needed to back Airbus, which is 80% owned by EADS, the Franco-German aerospace and defence group, and 20% by Britain’s BAE Systems. “The facilities they have created in this country at Broughton and Filton are world-class, and we have to continue to support them,” he said.

On the face of it, Airbus and its supporters should almost be able to take government support for granted. Tony Blair has been an enthusiastic proponent since opening the A380 wing factory at Broughton last year. Gordon Brown was in a similarly positive mood when he visited the plant during the election campaign.

But Whitehall insiders say the Airbus application faces considerable scepticism, particularly within the Treasury. Shriti Vadera, the former UBS banker who has become one of Brown’s closest advisers, is understood to be questioning the arguments in favour of government support, while others believe Airbus’s timetable for securing a decision to be ridiculously ambitious. “They submitted the application in March, and expect a decision by June. That is very tight, particularly considering we have had an election in the middle,” said one civil servant.

Other detractors point out that the government has in recent years given hefty support to the aerospace industry in general, providing money for the development of Rolls-Royce’s Trent engine, a contract to keep British Aerospace’s Hawk jet trainer production line running, and has recently given £180m to the Canadian transport group Bombardier to support the manufacture of components for a new aircraft in Northern Ireland. Airbus refuses to comment on the amount of aid sought, but aerospace industry insiders say the company has asked for £379m.

Boeing says MPs should think again before throwing their weight behind the demands for aid. Lew Platt, Boeing’s chairman, told The Sunday Times the British government should question whether Airbus still required financial assistance, and whether such assistance would be against trade agreements. “We fully believe that it is a violation of WTO rules, and I think we will have a chance to test that view,” he said.

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