The Fight Plan; Jet Set: Rainer Hertrich talks about the battle to defend Airbus's lead over Boeing, and Europe's effort to crack the U. S. military market.(Interview)

Byline: Rainer Hertrich (Hertrich is CEO of EADS, the owner of Airbus)

The decades-long dog-fight between Europe and the United States for command of the commercial-airline market has recently turned ugly. In 2003 Airbus delivered more commercial planes than Boeing for the first time, reopening an old battle over which company is more heavily, and unfairly, subsidized. The Chicago giant argued that, as market leader, its rival in Toulouse, France, should no longer receive launch aid for new planes, as it had since a 1992 truce allowed for subsidies on both sides. The clash of visions for the industry will heighten anew as Airbus begins test flights in 2005 of the A380, a superjumbo designed to replace Boeing's 747 on long hauls between major hub airports like New York. Boeing countered with plans for a fuel-efficient 200- to 300-passenger 7E7, betting that the future of travel is in direct flights between smaller airports. EADS, the German-French-Spanish company that controls Airbus, is also moving into the U.S. defense market, another arena dominated by Boeing. NEWSWEEK's Karen Lowry Miller spoke with EADS co-CEO Rainer Hertrich just after the United States officially complained to the World Trade Organization about Airbus subsidies.

LOWRY MILLER: What is behind the U.S. complaint?

HERTRICH: [Boeing CEO] Harry Stonecipher's aggressiveness is definitely triggering this escalation. You know, we have a saying in German: those who live in glass houses shouldn't throw stones.

But you are getting subsidies.

Of course, both sides get support. What we have received for the A380 is in line with the 1992 agreement. What Boeing will receive for the 7E7 is neither in line with the WTO nor in line with the 1992 agreement. So if I were in his shoes I would probably be more cautious.

Is the A380 a huge gamble?