Boeing gains a crucial victory over Airbus

Boeing vs. Airbus: The middle of the market battle
Boeing vs. Airbus: The middle of the market battle

Boeing is cheering a decision by the World Trade Organization to reverse a ruling that the company received an illegal subsidy to build its 777x jetliner in Washington state.

Boeing sees the ruling as a victory against its European rival Airbus and the European Union itself.

"This was a sweeping and clean win for the United States," said Boeing (BA) General Counsel J. Michael Luttig.

The case revolves around an $8.7 billion tax incentive program Washington approved for Boeing in 2013. That program extended existing tax breaks from 2024 to 2040, and was a factor in Boeing's decision to assemble the the 777X jet in the state. In 2014, the European Union filed a suit arguing that the tax break package should be considered a subsidy package forbidden by WTO rules. In November of last year, the WTO found in favor of the E.U.

Related: Boeing tax package ruled illegal by WTO

The E.U. and the United States have been sparring in court over alleged illegal subsidies for the two companies for years. In 2004, the U.S. claimed Airbus was receiving illegal subsidies from European governments. Europe responded in 2005 with a suit of its own, alleging Boeing's projects with federal programs represented a similar illegal subsidy.

Boeing accused Airbus and the European Union of trying to distract from their own breaches with the Washington subsidies case.

"The WTO has rejected yet another of the baseless claims the E.U. has made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal," said Luttig. "The E.U. and Airbus, meanwhile, continue to be in flagrant breach of WTO rulings."

Airbus vowed to continue its legal fight against Boeing.

"Boeing illegal subsidies are still illegal and need to be removed," said Rainer Ohler, Airbus Executive Vice President Communications. "The 'game' is far from over."

-- CNNMoney's Jon Ostrower contribued reporting.

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