EU likely to approve Rolls Royce loan

Rolls-Royce is on track to gain European Commission approval for a proposed loan from the British government, sources said.

Rolls-Royce is on track to gain European Commission approval for a proposed loan from the British government, sources said.

Rolls-Royce announced the British government would loan it £240 million sterling. However, such loans require approval of the European Commission, which guards against unfair state aid.

The sources said that although they expect the loan to be approved, the Commission had not yet made a final decision.

"A decision is expected soon," a Commission spokeswoman said. She had no comment about the nature of the decision.

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Rolls-Royce announced in February it would receive the loan to help it pay for development of the new Rolls Trent engines, which will be used in Airbus Industrie's A380 superjumbo jet.

At the time, Rolls said that the so-called launch aid would help it save 7,000 jobs.

US industries have accused European governments of subsidising their airline industry. Europe has responded that the United States has a similar practice through military procurement contracts.

Loans or other government aid with value must be reviewed by the European Commission when there is any question about whether they might constitute state aid. European Commission rules ban such aid except under specified conditions.