The Commission has approved the aid as it will not unduly distort competition in the single market, it said.
France will pay €330m and Germany €47.25m in repayable advances over a period of eight years.
Airbus will use the funds in the research and development of the heavy duty twin-engine civil helicopter, which will have a higher range of action and improved fuel efficiency than current helicopters. This will simplify access to platforms at sea and also facilitate search and rescue as well as humanitarian missions, the Commission said.
The risks in developing the project are high and the investment needed was too much for Airbus to finance iitself, while the financial markets were reluctant to finance a project where return on investment will take a long time, the Commission said.
Supporting the project is likely to stimulate further investment in a market that is expected to grow in the next decade, and where competitors continue to invest, it said.
Commissioner Margrethe Vestager, in charge of competition policy, said: "The French and German support will stimulate considerable private investment in this project. The support will help bring a new generation of innovative heavy helicopters to the market, without causing undue distortions of competition."