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Aircraft Industry Wants More EU Funding

Airbus and other European aerospace companies called on European Union governments to boost funding for new aircraft in order to keep pace with U.S. rivals like Boeing.

BRUSSELS (AP) -- Airbus chief executive Tom Enders and European aerospace companies called Thursday on European Union governments to boost funding for new aircraft in order to keep pace with U.S. rivals such as Boeing.

"We are appealing to the EU and to the national authorities to beef up their research and technology programs, that would be a stimulus for the industry," Enders told reporters.

The worst global recession in 80 years has sent air traffic into freefall as people travel less or take cheaper flights and send less air cargo. World airlines expect to lose $4.7 billion this year as revenues drop by $62 billion, or 12 percent.

This has a knock-on effect on manufacturers. Aircraft orders are down and existing orders have been postponed or canceled, said the Aerospace and Defence Industries Association of Europe, or ASD. A worse slowdown could hurt companies and their 649,000 workers in Europe, it said.

Car manufacturers have already won euro7 billion in soft loans for greener cars and have beat some of the worst of a sales slump thanks to government cash incentives for car buyers.

The aircraft industry says it also needs help.

Allan Cook, the head of the ASD aerospace federation, said the aircraft sector wasn't seeking a bailout but "we require investment in our technology, in our business, just as much as any of the other sectors."

Enders said access to financing is urgent for customers and suppliers who are "hit on various fronts" and governments could help keep the sector going with loan guarantees for small aerospace companies that are finding it hard borrow because of the credit crisis.

"We see suppliers every day in distress and definitely need support," he said. "A lot of our important suppliers are indeed very small companies who were financially not very well equipped even before the crisis."

"You don't need to be a prophet to predict that we will, as a result of this crisis see some going out of business," he said.

France is already helping out the aerospace industry with a euro5 billion plan to increase bank lending to Airbus customers. Airbus expects new orders to fall to between 300 and 400 this year, after booking 777 net orders last year.

Enders said Germany and Britain were looking at similar programs.

He also called on EU regulators to speed up promised funding for the euro1.6 billion Clean Sky project to help develop greener aircraft, saying delays make it harder for airlines to cope with tighter environment standards under a carbon trading program that will start in 2012.

He said the project would fail and companies would be forced to redirect the euro800 million they had planned to spend if red tape continued to hold it up.

"This would effectively cancel out the EU's major contribution to reducing CO2 emissions through new technologies," he said.

Cook said bureaucratic delays could cause European countries to fall behind U.S. rivals.

"The Americans don't have to go through this level of bureaucracy to see investments made in their industry," he said.

He said European defense spending is now looking "significantly less than the spending power than the USA" which plans to spend $664 billion on defense next year. France is reprioritizing its investments, Spain is cutting back, Italy is considering cutbacks and German spending is flat, he said.

He said higher U.S. research investment on defense means "the gap that exists between what we have and what they have gets wider and wider."

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