UPDATE 2-Alcan aerospace faces flat growth, eyes light alloys

* Alcan aerospace branch sees flat growth in 2009 and 2010

* Output cuts by plane makers offset by advent new models

* Sees aluminium staying competitive vs composite parts

(Recasts, adds details)

By Gus Trompiz

VOREPPE, France, June 10 (Reuters) - The aerospace branch of Rio Tinto Plc's (RIO.L)(RIO.AX) aluminium unit Alcan expects little or no growth this year and next, with the rise of new models like the Airbus A380 offset by static demand elsewhere.

"We have stagnant underlying demand but which is significantly compensated by new programmes," Christophe Villemin, president of Alcan Global Aerospace, Transportation and Industry (ATI), told reporters, citing the new Airbus A380 and the development of Boeing's (BA.N) future 787 plane.

"We should see (aerospace) demand rise again towards the end of 2010."

Alcan Global Aerospace supplies light-weight aluminium products to plane manufacturers such as Boeing and EADS (EAD.PA) unit Airbus and claims co-leadership of this market alongside U.S.-based aluminium group Alcoa Inc (AA.N).

Aerospace activities represent about half of the 2 billion dollars of annual sales generated by Alcan's ATI division, Villemin said during a visit to a research centre near Lyon at the foothills of the French Alps.

Alcan also expects the ATI division as a whole to record flat growth this year.

Outside aerospace, it is seeing falling activity in operations like industrial machinery which are affected by the recession, and growth in areas like non-air transport which are being boosted by government stimulus plans.

He declined to comment on the possible sale of the division by Rio Tinto, which has said it is considering selling certain downstream assets.

In response to sluggish demand in aerospace and some other sectors, the unit has reduced capacity at its plants. But it will significantly raise research and development spending in aerospace this year and next, Villemin said.

Alcan is confident aluminium alloys can compete with composite products which have emerged as an alternative material for plane structures, notably in Boeing's 787.

This is partly because the long record of aluminium parts in plane building will be reassuring for manufacturers who are increasingly focused on avoiding delays and supply chain snags, Villemin argued.

Both Boeing and Airbus have been hit by a series of delays to planned models, including the 787 and Airbus' A400M military transport aircraft.

Innovations in low-density alloys, such as those showcased at Alcan's Voreppe centre, would also help make metallic products competitive with synthetic alternatives in the coming years, Villemin said. (Editing by David Holmes)