AIR Airbus SE

Robert Wall

SEOUL--Airbus SE (AIR.FR) is warning airlines the cost of planes could rise from an escalating trade dispute between the U.S. and Europe over commercial subsidies.

The U.S. has this year drawn up a list worth $11 billion in tariffs, including on plane components, after the World Trade Organization ruled the European Union didn't eliminate illegal subsidies provided to Airbus. The EU has drawn up its own list in a countercase in which the WTO determined subsidies benefiting Boeing Co. (BA) also haven't been full rescinded.

The actions are the latest round in a trade subsidy dispute that dates back to 2004.

Airbus in recent days has been increasingly vocal about the threat those actions could pose to airlines. Ahead of a meeting of carriers in Seoul this weekend, the European plane maker, in a letter, said "if tariffs are applied, the effects would include greatly increased costs to U.S. and European airlines, aerospace suppliers and manufacturers." And, it added, "time is running out."

The Sunday at the International Air Transport Association meeting, Airbus's chief plane salesman Christian Scherer reinforced that message. Mr. Scherer said the U.S. threat to impose tariffs would likely trigger retaliation by the EU, harming airlines on both sides of the Atlantic and leading to higher costs for passengers. He also said that day that U.S. action could "have ripple effects with global dimensions."

Delta Air Lines Inc. (DAL) Chief Executive Ed Bastian on Saturday said such tariffs would be a concern if they increase the price of planes.

Mr. Scherer told reporters Sunday that the demand for new planes was generally healthy, but trade tensions were a dark cloud on the horizon. Concerns about trade issues, including the escalating trade row between the U.S. and China, could put off airlines from buying planes, he said.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

June 02, 2019 20:42 ET (00:42 GMT)

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