China raps EU carbon law as it takes 1st superjumbo

TOULOUSE, France Mon Oct 17, 2011 5:31am EDT

The first Airbus A380 delivered to China Southern Airlines takes off from Toulouse-Blagnac Airport, near Toulouse, October 14, 2011.           REUTERS/Jean-Philippe Arles

The first Airbus A380 delivered to China Southern Airlines takes off from Toulouse-Blagnac Airport, near Toulouse, October 14, 2011.

Credit: Reuters/Jean-Philippe Arles

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TOULOUSE, France (Reuters) - China's largest airline by fleet size kept up pressure on the European Union over carbon trading rules as it took delivery of the country's first European A380 superjumbo on Friday.

China Southern (1055.HK)(600029.SS), which has ordered five of the world's largest airliners built by Europe's Airbus EAD.PA, said it would fly the first two aircraft on busy domestic routes before putting the planes on foreign routes next year.

It has not yet decided whether to operate the aircraft to Europe or the United States.

China and the European Union have clashed over the trade bloc's plans to force airlines to adopt a carbon trading scheme from January 1 next year, a move which airlines say would effectively tax the airlines that fly the longest routes.

The EU denies its scheme is a tax.

The chairman of China Southern told reporters the airline would protect the interests of its passengers as it weighs how to introduce the prestige aircraft on international routes.

"The outcome of the negotiations between China and the EU on emissions will not be a key factor for us to consider where to fly our A380s, but I should say that the EU's decision on emissions would to a large extent affect an airline's operating costs and at the end of the day the interests of our passengers," Si Xianmin told reporters.

China has threatened to buy fewer aircraft from EADS subsidiary Airbus as a result of the dispute with the EU, which the aerospace industry fears could blow up into a full-scale trade row when the scheme is imposed in a few months.

Aircraft purchases are usually coordinated through state purchasing agency CAS and have to be approved by the Chinese government.

The head of the airline was carefully non-committal when asked if the EU row could affect future aircraft purchases.

"Before we decide whether we are going to buy more Airbus or Boeing planes we have to take the market situation into consideration and make a very careful analysis of the markets because China Southern has such a big aircraft fleet," Si said.

"Currently China Southern operates 440 aircraft. Boeing and Airbus have a 50/50 split."

China had originally hoped to have delivery of the superjumbo in time for the 2008 Beijing Olympics but deliveries were delayed by several years due to production problems.

The same airline has also ordered Boeing's (BA.N) carbon-composite 787 Dreamliner, which reached its first Japanese customer after a similar three-year delay last month. China Southern has said it expects to get its first 787 this year.

The airline said it would configure the A380 to carry 506 people including eight in first-class suites.

It expects to receive its second A380 in December, the third in February, another in the second half of 2012 and the final one in 2013.

Si said the airline would evaluate the aircraft's performance before deciding whether to buy any more A380s.

Airbus estimates China will need over 200 superjumbo-sized aircraft by 2030 to feed the world's fastest-growing market and meet the increasing global connections of a rising superpower.

Boeing is less optimistic about demand for the very largest aircraft and is betting on smaller and lighter aircraft like the 210-290 seat 787 to open up new direct routes to secondary cities that may become big destinations in their own right.

(Editing by James Regan)

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