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Airbus competes on wings of government subsidies

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In a quiet hangar outside this sunny French city, teams of German, British, French, and Spanish engineers are busy with the final assembly of half a dozen giant Airbus A320s - slowly fleshing them out for flight. ``Here you see Europe at work,'' says strategic planner Adam Brown, who joined Airbus Industrie in 1973, three years after the operation was launched. ``Sometimes even we forget that it has that magic.''

An ungainly transport plane known as the ``Super Guppy'' lugs wings in from Britain, fuselages from West Germany, cockpits from France, tail sections from Spain, and flaps from the Netherlands. Engines and other parts come from the United States.

The result, pieced together in Toulouse, are jetliners that have been competing strongly against dominant Boeing and No. 2 McDonnell Douglas. The technologically sophisticated A320, a narrow-body 150-seat jet with fuel-saving features, has been the hottest-selling aircraft in commercial aviation history.

``C'est noveau, c'est Europe,'' reads a sign near the A320 assembly line.

But there is something rather old and European at Airbus as well - government subsidies and red ink.

``Subsidies are integral to Airbus,'' says Paul Nisbet, senior aerospace analyst with Prudential-Bache Securities. ``Airbus is still clinging to the governments with which it is involved.''

Of more immediate concern: the June 26 crash of an A320 during a demonstration flight in eastern France. Airbus officials say early indications are that the plane was not at fault. But the pilot and the pilots' union have disagreed. An investigation is in progress.

One of the big attractions of the A320 is ``fly by wire.'' Instead of long linkages of cables to manipulate flaps, ailerons, and elevators, the pilot's control stick sends signals to on-board computers that then guide the plane. Without all that cable, planes are lighter and can save fuel. Computerization also can keep a pilot from overcompensating in an emergency.

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