AirAsia in final lap of Airbus jet talks

PARIS Fri May 20, 2011 2:16pm EDT

PARIS May 20 (Reuters) - AirAsia (AIRA.KL) appeared close on Friday to what could be a major deal to buy Airbus EAD.PA passenger jets, weeks ahead of the Paris Air Show.

The low-cost Malaysian airline said in Febuary it was considering buying as many as 175 of a revamped medium-haul passenger jet called the A320neo, as well as wide-body A330s.

AirAsia Chief Executive Tony Fernandes took the unusual step of revealing a key twist in negotiations on his Twitter account -- mixed with a plug for Team Lotus, his Formula One racing team.

"Good session at the track. Going to Nice now to meet Airbus and secure AirAsia future," Fernandes told his followers on the micro-blogging site after practice at the Spanish Grand Prix, which takes place in Barcelona this weekend.

An industry source told Reuters separately that serious negotiations were under way between AirAsia and Airbus for a deal most likely to be announced at the June 20-26 air show.

A second industry source cautioned the deal had not yet been finalised.

Toulouse-based Airbus EAD.PA declined to comment.

The A320neo is a revamped version of Airbus's best-selling A320 medium-haul plane which seats about 150 people.

The deal has in turn sparked a fight between engine makers for a lucrative contract to power the jets, the sources said.

The plane, due to enter service in 2015, boasts 15 percent fuel savings due mainly to new engines from either United Technologies unit (UTX.N) Pratt & Whitney or CFM International, co-owned by General Electric (GE.N) and Safran (SAF.PA).

Boeing (BA.N) is considering whether to adapt its competing 737 or build a new version to counter the Airbus move.

Participants usually go to great lengths to keep aircraft negotiations secret, with Airbus and Boeing playing cat and mouse across the planet to capture deals worth billions. Even the whereabouts of a sales person can be hot information.

With 69,000 followers on his Twitter account, Fernandes may soon change all that.

(Editing by Jane Merriman) (Reporting by Tim Hepher)((+331 4949 5452 paris.equities@reuters.com))