In the interim ruling, the WTO according to Business Week concluded that the $4 billion in aid Airbus received from four European governments for the development of the A380 passenger jet constituted illegal subsidies. The ruling could hurt Airbus parent company European Aeronautics and Space.

Together with Los Angeles-based Northrop Grumman, EADS threw its KC-45 tanker into the bidding war over a contract to outfit the U.S. Air Force with 179 refueling tankers. Based on the Airbus A330, the KC-45 won the contract in February 2008, but it was overturned four months later by the Government Accountability Office after Boeing challenged the decision.

The GAO said it found problems with the bidding problems, and the contract, estimated to be worth $35 billion, is now up for grabs in 2010. Boeing is bidding with an altered version of its 767.

Observers say the latest WTO decision against Airbus, a maker of passenger planes, will be used by Boeing and company-friendly politicians as an argument that the tanker should be built by an American company.

The WTO ruling "further demonstrates that the French tanker should have been disqualified because of illegal subsidies," Rep. Todd Tiahrt, R-Kan, told Defensenews.com. "We need an American tanker built by an American company with American workers."

But Northrop Grumman says the Airbus ruling has nothing to do with the KC-45 tanker contract.

"This dispute has no relevance to and should have no impact on the Defense Department's tanker replacement program," the company said in a statement. "Civil aircraft subsidies have no impact on military procurement and the WTO cases should not be permitted to have any bearing on the Defense Department's ability to buy the best tanker available for our war fighters.

"The tanker competition should be allowed to run, unencumbered by politics, in a fair and open manner with the end game being the selection of the best tanker capability for our war fighters, and the best value to the American taxpayer," the company added.

The WTO ruling is the latest step in a lengthy legal war between Boeing and Airbus.

The Europeans have also filed a complaint with the WTO, charging that Boeing has been handed multibillion-dollar subsidies by state and federal governments, NASA and the departments of Defense and Commerce. The WTO is expected to issue a ruling sometime in early 2010.

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