October 17, 2012 / 8:00 AM / 7 years ago

Berlin withholds $781 million loan for Airbus A350: paper

A model of an Airbus A350 passenger plane is displayed at a news conference in Hong Kong, March 7, 2011. REUTERS/Bobby Yip

FRANKFURT/BERLIN (Reuters) - The German government is holding back 600 million euros ($781.4 million) of a promised loan for the development of the Airbus A350, in the latest sign of Berlin trying to influence decisions at parent company EADS EAD.PA, a German paper reported.

EADS was already mulling doing without part of the loan in order to prevent the government from influencing its production locations, another German paper wrote earlier this year.

The A350 loan would have been the second tranche of a loan of up to 1 billion euros Berlin had promised to EADS for the development of Airbus’s answer to Boeing Co’s (BA.N) 787 Dreamliner in the mid-sized segment of the aircraft market.

Germany had said Airbus should locate more of its activities in the country and hire equal numbers of French and German executives, provoking the group to say it would not tolerate such political meddling.

German concern over jobs was one of the factors that contributed to the collapse last week of the proposed merger between EADS and BAE Systems Plc (BAES.L), that would have created the world’s biggest arms and aviation group.

The aid for the A350 should have been paid out by now, according to business daily Handelsblatt, which did not cite its sources for saying some of the money had been withheld.

The economy ministry, which told the paper the government was “in confidential talks on the topic of the A350”, was unavailable for immediate comment on Wednesday.

“We don’t comment on the contents of our contractual agreements,” a spokesman for Airbus said.

Former EADS CEO Louis Gallons had hinted in January that the company could eat into its cash pile of over 11 billion euros rather than tap new loans, which were intended mainly to share out the development risk. ($1 = 0.7679 euros)

Reporting by Victoria Bryan in Frankfurt and Sarah Marsh in Berlin; Editing by David Holmes

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