Airbus steps up war on Boeing

Relations between Airbus and Boeing plunged to a new low yesterday with the European plane-making consortium accusing its American arch-rival of breaking European law in signing exclusive sales agreements with American carriers.

Boeing raised the temperature further by claiming European governments had deliberately softened their criticism of China's human rights record in order to help Airbus win orders.

Airbus separately raised the competitive stakes by announcing the marketing launch of a stretched version of its A340 wide-bodied jet to compete for the first time with Boeing's evergreen 747. A full launch, backed by a $2.5bn investment programme, was predicted for September or October.

Rolls-Royce has been selected as the main supplier of the new engines, a significant breakthrough.

The fresh row with Boeing erupted as Jean Pierson, managing director of Airbus, claimed in a "personal" statement that Boeing's proposed merger with McDonnell Douglas could enable the US plane giant to "throttle" the Europeans.

He added that Boeing planned "to limit Airbus Industrie's role to that of a niche player, with a long-term view to eliminate it".

Mr Pierson raised the possibility that Airbus could start legal proceedings against Boeing in the European courts. "We will apply all legal and necessary actions.... It is a way to lock markets but will stop any aircraft development progress."

Airbus refused to give details of private talks with Karel van Miert, European Competition Commissioner, last Friday. The European Commission, in a controversial move, is investigating the Boeing merger despite the fact that the two companies involved are based outside the European Union.

Mr Pierson claimed the merger would facilitate exclusive deals between Boeing and US airlines. So far the Seattle group has concluded three such supply arrangements, with American Airlines, Continental and Delta.

Airbus claimed these arrangements contravened provisions in the Treaty of Rome against cartels and market abuses.

Boeing insisted it would gain approval for the merger, but warned the European Commission's inquiry would ultimately damage both the world's largest plane-makers.

Ron Woodard, Boeing's commercial aircraft director, explained: "If things did escalate into a serious trade friction, I guess people may be hurt on both sides of the Atlantic."

In an extraordinary outburst, Mr Woodard claimed European governments had backed off from a human rights confrontation with the Chinese and "are being rewarded with aircraft sales". Airbus has so far won 93 orders in China since it began marketing there three years ago.

The company's stretched A340 will seat up to 378 passengers, with a longer fuselage and bigger wings, putting it in the same market as the original Boeing 747.