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Airshow: Airbus confident on China deliveries as EU row eases

ZHUHAI, China (Reuters) - Europe's Airbus expressed optimism it could rescue dozens of deliveries of wide-body passenger jets to China after the European Union agreed to freeze a carbon emissions scheme fiercely opposed by Beijing.

The EU said on Monday it would "stop the clock" for a year on plans to force non-EU airlines to adopt its Emissions Trading Scheme (ETS) in the face of opposition led by China and the United States, which say it would violate their carriers' rights.

At the height of the row, Airbus (part of aerospace group EADS ) had said China was blocking deals to buy passenger jets worth at least $12 billion, forcing the planemaker to put off part of a planned production increase that would have generated an extra 1,000 jobs.

"We hope we will go back to business as usual ... and that we won't have to worry about ETS w hen we do business here," said Laurence Barron, president of Airbus China.

According to Airbus, contracts held up by the dispute include Chinese purchases of 35 long-haul A330 jetliners. Industry sources have said another 10 may be caught in the net.

"I believe we will deliver those airplanes," Barron told Reuters at a Chinese air show, asked whether Airbus would be able to restore any frozen business.

The dispute concerns a market-based scheme to make airlines account for their emissions by forcing them in many cases to buy allowances based on the length of the flight.

Countries opposing the scheme say it would violate the sovereignty of their airspace and have warned of a trade war.

The EU says action is urgently needed to help the bloc meet its climate obligations and has accused the international community of dragging its feet over the issue.

Announcing a one-year moratorium for flights into and out of EU airports, the European Union said it hoped to create a positive atmosphere for talks on an alternative global plan.

GLOBAL SOLUTION

The matter is being discussed at the United Nations body responsible for harmonizing air transport rules, the Montreal-based International Civil Aviation Organization.

"We support a global solution and the EU is going in that direction so we think it is a good decision," Barron said.

China is the world's fastest-growing air transport market and is set to overtake the United States as the world's biggest within 20 years, Barron said.

To help meet fast-growing demand in Asia, Airbus is in the midst of plans to increase production of the A330, its best-selling wide-body jet, to 10 aircraft a month from next year.

But it suspended a plan to boost production still further to 11 a month in 2014, citing doubts over the delivery of jets held up by the diplomatic row between the EU and China.

Barron's confidence that the jets would now be delivered indicates the higher production plans could be reinstated, if Airbus sticks by the logic of its previous announcements.

An Airbus spokeswoman said no decision had been taken on further increases in A330 production, which stands at 9.5 month and will reach 10 a month in the second quarter of 2013.

Barron, the top Airbus executive in China, where it delivers over 20 percent of its aircraft, declined to comment on doubts over the future of a $4 billion A380 plane order for Hong Kong.

Airbus said in March that unidentified orders for 10 A380s could be swept up in the emissions row and industry sources said they were earmarked for Hong Kong Airlines, a unit of the HNA Group, which also owns Hainan Airlines Co Ltd <600221.SS>.

The chairman of HNA Group, China's fourth-largest aviation group, said last week he may cancel the order but cited weak market conditions. (Reporting by Tim Hepher and Alison Leung; Editing by David Holmes)

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