As competition between Boeing and European aviation rival Airbus heats up, the two groups may see a new dogfight over the issue of government subsidies, analysts say.
The prospect of a new political row is looming as Boeing is gaining on Airbus due to the success of its 787 "Dreamliner" program.
Boeing, set to put its 787 into service in 2008, has already received 363 firm orders for the new long-range aircraft. The plane, which carries 250 to 300 passengers, is seen as the future for Boeing and many airlines seeking to benefit from its improved fuel economy.
Richard Aboulafia, an analyst at the Teal Group, told a recent Washington forum sponsored by the American Enterprise Institute that the number of orders is "unprecedented" and could help Boeing recapture the top market position for civil aviation from Airbus.
"Boeing really started again looking into the future in 2004 with the 787 and is reaping the dividends now," he said.
Airbus, meanwhile, has been sputtering as it tries to revamp its lineup. The A350, the main rival for the 787, is being redesigned as a result of complaints from airlines and may be renamed the A370, and its launch may be pushed back two years to 2013, according to Aboulafia.
More importantly, the superjumbo A380, aimed at taking market share from the Boeing 747, has experienced design problems and its launch is likely to be delayed several months from its original date at the end of this year.
The A380, which can carry as many as 850 passengers, has received 159 orders but none so far this year. Airbus commercial chief John Leahy has said he expects about 20 before the end of the year.
While competition between Boeing and Airbus has been heating up, the landscape may change as a result of the political environment.
The US and the EU have each filed complaints at the WTO, and the environment may become more heated if global negotiators fail to reach a deal under the Doha Round to ease trade barriers, some analysts say.
Washington disputes the EU's ability to give direct government subsidies for aircraft development, while European officials argue that Washington accomplishes essentially the same thing through indirect aid, including defense contracts.
"If Doha fails, the USTR [United States Trade Representative] and the EU could use the case to settle scores," said Bruce Stokes, a National Journal columnist and fellow at the Pew Research Center who follows the companies.
Robert Herzstein, a lawyer with the Washington firm Miller and Chevalier, said a drawn-out political fight over aviation would hurt both sides.
"I truly believe that both parties would be losing" if each side tried to use the WTO process to punish the other, he said, adding that the 787 is a global endeavor.
"Almost half of the components of the A-380 are produced in the United States" he said.
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