By Tim Hepher and Andrew Callus
GENEVA (Reuters) - Planemaker Boeing received at least $5.3 billion of banned U.S. subsidies, the World Trade Organization said on Thursday in a dispute that shows no signs of an end to bitter transatlantic wrangling.
The subsidies included support in the form of research and development payments to Boeing from the NASA space agency.
The ruling by a panel of trade judges is the latest round in a six-year battle between the industry's two giants that has spiraled into the world's largest and costliest trade dispute.
The WTO verdict backs some but not all of a tit-for-tat legal case over Boeing aid brought by the European Union.
A separate WTO trade panel condemned European support for Boeing rival Airbus in a parallel case last year.
Both sides immediately claimed the upper hand in the row, which now extends to 2,000 pages of trade court rulings.
"This WTO panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today," European Union trade chief Karel De Gucht said.
Airbus, part of European aerospace group EADS, said it had lost $45 billion in aircraft sales because of the subsidies.
In Washington, U.S. Trade Representative Ron Kirk said the ruling vindicated a longtime U.S. position that "the subsidies the Europeans give to Airbus dwarf anything that the U.S. government does for Boeing."
Kirk said Washington disagreed with the panel's findings on Boeing support and was studying whether to appeal. A European source said the European Union may also appeal some findings.
As the latest telephone book-sized report was wheeled out of WTO offices in Geneva, the companies at the heart of the dispute opened fire with another salvo of claims through the media.
"It's time for Boeing to stop denying or minimizing the massive illegal subsidies it gets," said Rainer Ohler, head of public affairs and communications at Toulouse-based Airbus.
Boeing acknowledged receiving $2.7 billion of aid on top of a dispute that has already been aired, but accused its rival of diverting attention from more pernicious types of European aid.
"This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing," said Michael Luttig, executive vice-president and general counsel at Boeing.
LENGTHY PROCESS
Boeing says the condemned U.S. aid includes $2.2 billion in tax breaks which the United States feels it has already remedied but which Airbus insists must be repaid. Washington says it is Airbus that must repay $4 billion of A380 superjumbo subsidies.
The WTO's verdict on appeals by both sides in the earlier case against aid for Airbus is expected to be issued next month.
The two-pronged subsidy dispute has long soured relations between the world's trading superpowers.
Most recently, it spilled over into a fierce battle for a contract to supply tanker planes to the Pentagon, which was at first awarded to Airbus but eventually went to Boeing.
The complaints could help determine how not only Airbus and Boeing, but future competitors in China, Russia, Brazil, Japan and Canada, run their fast-growing aircraft sectors.
However, analysts say it could be years before appeals and possible compliance procedures are exhausted.
"Boeing began its complaint with a strong argument, but Europe's counter-complaint has muddied the waters," said aircraft analyst Richard Aboulafia of Virgina-based Teal Group.
"At the end of the day it won't matter much. Both sides will continue to see exactly what they want to see, and will do exactly what they want to do."
Even if the WTO verdicts against both sides are upheld, both sides disagree over what that would mean for future projects.
The United States has warned Airbus not to go back to its founder governments -- Britain, France, Germany and Spain -- for its A350 airliner, but an EU official said the ability of governments to use the loans system had not been altered.
(Additional reporting by Doug Palmer, Juliane von Reppert-Bismarck; Editing by Jon Boyle)