PARIS - European planemaker Airbus took a step closer to winning government loans to develop its A350 jetliner on Monday, drawing an immediate response from U.S. rival Boeing which called the move illegal.

European nations that produce Airbus jets -- France, Germany, Britain and Spain -- aim to decide by the end of June how much money they are prepared to put up to help Airbus get the 10 billion-euro (8.4 billion pounds) project off the ground.

We are disappointed by reports that the Airbus member states intend to provide - and Airbus to accept - billions of dollars of launch aid for the A350 just as the WTO is to rule on the WTO-consistency of such financing, Boeing said in an e-mailed statement on Monday.

Airbus and Boeing, which control the market for passenger jets over 100 seats, have accused each other of taking illegal subsidies and have taken their cases to the WTO.

We believe that repayable loans are compatible with WTO rules, French Secretary of State for Transport Dominique Bussereau said.

Germany is prepared to provide 1.1 billion euros of financing, German government aerospace spokesman Peter Hintze said at the Paris Air Show.

Bussereau said France would contribute 1.4 billion.

Britain's minister for business and defence, Lord Drayson, said he was currently not prepared to disclose how much the UK could contribute.

The fourth country that houses Airbus jet production plants, Spain, did not take part in Monday's meeting, and Hintze said it was not yet certain whether the country would contribute to funding for the A350 project.

DECISION OUTSTANDING

An agreement between Germany, France and Britain alone could mean there is less aid available for the project, Hintze said, adding that he thought Spain would come to the table as well.

The Spanish government has not yet committed any funding or made a definitive decision regarding the financing of the new aircraft, a spokesman for Spain's Industry Ministry said.

There has traditionally been close correlation between the sources of financing and the share of major Airbus projects awarded to individual countries.

The A350 was designed to compete with the Boeing 787 Dreamliner, whose maiden flight is expected later this month.

Boeing was first to the market with its successful 787 and gained a five-year advantage while Airbus hesitated over strategy and focussed initially on its larger 525-seat A380 superjumbo.

Airbus has since recovered some ground as Boeing grapples with two years of production delays that pushed first delivery to 2010.

What I want to stress is that there is political will to support this programme. We all want to move forward, Bussereau said.

The funding spat comes in the week of the fortieth anniversary of Airbus, being celebrated by the planemaker with a flypast at the Paris air show.

Airbus was originally an industrial consortium backed to varying degrees by four countries -- France, Germany, Spain and the UK -- but is now wholly owned by EADS (EAD.PA), which does not include any British interest.

Britain, however, maintains a seat in a ministerial oversight group of the four nations which still host the bulk of Airbus production.

Germany United kingdom