U.S. rival Boeing Co (BA.N) on Friday argued that a U.S.-based plant would not dilute Washington's case against European aircraft loans that the World Trade Organization has found illegal. The same body has also faulted some U.S. aid to Boeing.

Airbus, owned by Europe's EADS (EAD.PA) and Boeing, the world's dominant jetmakers, are involved in the largest-ever dispute at the WTO over mutual accusations of billions of dollars of illegal aircraft subsidies.

"While it is interesting once again to see Airbus promising to move jobs from Europe to the United States, no matter how many are created, the numbers pale in comparison to the thousands of US jobs destroyed by illegal subsidies, which Airbus and its European government underwriters have failed to remove to the satisfaction of the U.S. government and in direct contravention of international trade law," Boeing spokesman Charlie Miller said in an emailed statement.

Airbus had initially offered to assemble some commercial freighters in Mobile to sweeten a bid for a bitterly fought $35 billion refueling tanker contest it lost to Boeing last year.

The latest plan calls for a $600 million Alabama assembly plant dedicated to the A320 passenger jet that would start producing four aircraft a month in 2017, according to two people familiar with the matter who were not authorized to speak publicly.

One local official said the plant would create a significant number of direct jobs, and could attract many smaller companies needed to provide components for the new passenger planes, to the region.

It would be the second plant outside Europe for Airbus's most popular jet. The EADS (EAD.PA) unit produces 37 planes a month between France and Germany and 3 a month in China. By the end of this year, it plans to reach 38 in Europe and 4 in China.

EADS also builds helicopters in Columbus, Mississippi.

EADS Chief Executive Tom Enders said on Thursday no final decision had been taken and called recent reports "speculation."

Sources have not ruled out an announcement as early as Monday ahead of the July 9-15 Farnborough Airshow in the UK, but there are signs some hurdles remain before a deal can be finalized.

"There are plenty of conditions that would need to be met for such a concept to be implemented. This just isn't the case right now," a source familiar with the matter said.

(Reporting by Karen Jacobs in Atlanta, additional reporting by Tim Hepher and Elena Berton in Paris and Andrea Shalal-Esa in Washington; Editing by Christian Plumb)

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