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Photograph: en.wikipedia.org

The European Union suffered a blow in its lengthy spat over airplane maker subsidies on Thursday when the World Trade Organization (WTO) said that the bloc had failed to stop its subsidized financing of Airbus, which had previously been found to break global trade rules.

The WTO decision was the latest in a list of similar rulings in the dispute between the EU and Airbus on one side and the United States and US aircraft manufacturer Boeing on the other.

The Geneva-based trade body had previously found that the US had subsidized Boeing to the detriment of Airbus, and it is expected to rule again on Boeing in the coming months.

Thursday's decision could pave the way for US punitive duties against imports from the EU in case Washington decides to apply for such measures at the WTO.

The WTO agreed with Washington's complaint that financial support from the EU and EU member states have allowed Airbus to develop its model range, and that the aid was a "genuine and substantial" cause of lost sales for Boeing.

"We have long maintained that EU aircraft subsidies have cost American companies tens of billions of dollars in lost revenue, which this report clearly proves," US Trade Representative Michael Froman said.

"We call on [EU countries] to end subsidized financing of Airbus immediately," he added.

"The World Trade Organization has now found that Airbus is and always has been a creature of government and of illegal government subsidy," Boeing vice president Michael Luttig said.

The European Union made clear that the spat is not over.

A spokesman of the European Commission noted that the EU has the right to appeal.

"Two other WTO rulings are expected in the coming months as regards the American subsidies for Boeing," the spokesman of the EU executive body added.

Airbus said it was confident an EU appeal could be won, and charged that Boeing has continued to receive illegal public aid.

"So it appears that Boeing and the US continue to litigate mainly to try to justify their own grab for state cash," the company said in a statement.

Airbus reiterated that it seeks a mutual agreement to settle the dispute that has been going on since 2004.

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