UPDATE 1-Canada's Bombardier not selling air unit stake to China firm

Tue Feb 7, 2012 7:11pm EST

* Bombardier CEO denies German report of sale to China firm

* Beaudoin in talks with China firm on cooperation

* Bombardier's C-series competes with Boeing, Airbus

By David Ljunggren

BEIJING, Feb 8 (Reuters) - Canadian plane maker Bombardier Inc on Wednesday flatly denied a media report that it could sell a stake in its commercial aviation unit to the state-owned Commercial Aircraft Corp of China.

Bombardier shares had risen more than 3 percent in Toronto trading on Tuesday, helped higher by the report in Germany's Handelsblatt newspaper.

Analysts said such a deal could give Bombardier, the world's third-largest commercial plane maker, access to China's fast-growing aviation market.

"We don't understand where they came up with this ... It is completely false. There is no truth to it," Bombardier CEO Pierre Beaudoin told Reuters in an interview in Beijing.

Bombardier signed a framework deal with Comac last March to collaborate on commercial aircraft. The agreement could see the two sides cooperate on Bombardier's C-series aircraft and Comac's C919 plane.

The two sides have yet to sign a completed deal.

"They have their own priorities. Our aircraft is quite advanced -- we're a year or two ahead of them," said Beaudoin, who is Beijing with a Canadian business delegation led by Prime Minister Stephen Harper.

Bombardier is less than two years away from launching the C-Series, a $3 billion plan to build its biggest plane yet and take on industry giants Boeing and Airbus.

Sales of the narrow-body jet, aimed at the 100- to 149-seat market, have been sluggish and weighed on Bombardier's stock price. But Beaudoin said he was happy with the state of the order book.

"We have 138 firm orders. For us, that perfectly meets our expectations. We have a two-and-a-half year backlog ... we're perfectly happy as it stands with orders," he said.

Beaudoin declined to comment on a report by Canada's Business News Network which said U.S. airline Republic Airways Holdings Inc -- the largest customer for the C-series -- was concerned about low order levels for the airliner.

All customers with firm orders had confirmed they would be taking delivery of their aircraft, he said.

Beaudoin said he saw potential for more sales in Asia, which he said would make up around 25 percent of the future world market for commercial aircraft.

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