Exclusive - Airbus to China: We support you, please buy our jets

BRUSSELS Sun May 12, 2013 8:16pm EDT

An A380 aircraft is seen through a window with an Airbus logo during the EADS / Airbus 'New Year Press Conference' in Hamburg January 17, 2012. REUTERS/Morris Mac Matzen

An A380 aircraft is seen through a window with an Airbus logo during the EADS / Airbus 'New Year Press Conference' in Hamburg January 17, 2012.

Credit: Reuters/Morris Mac Matzen

BRUSSELS (Reuters) - China's decision to ease a boycott of some $11 billion in Airbus jet orders followed a high-level appeal from the planemaker urging Beijing to recognize its support over a trade row with Europe, a letter seen by Reuters shows.

It gives a glimpse into the intensity of the lobbying in the dispute, which helped persuade the European Union to freeze a law on regulating international aviation emissions.

China partly lifted a blockade on 45 long-haul A330 jet orders during a visit by French President Francois Hollande last month.

Behind the scenes, Airbus claimed partial credit for the EU climb-down and cheered what its chief executive described to Beijing as "joint efforts" to limit damage to Chinese airlines.

Writing to China's top aviation official shortly after the EU back-pedaled on its Emissions Trading Scheme last November, Fabrice Bregier said Airbus had been "very active" in supporting China's preference for a broader global system.

"Through our joint efforts, we have managed to ensure that Chinese airlines are not unfairly impacted by the scheme as previously planned," Chief Executive Fabrice Bregier said.

"I hope we at Airbus have been able to clearly demonstrate our strong support to Chinese aviation."

Airbus, which also got backing from European leaders, says the blocked orders alone put 2,000 jobs at risk.

"Since I became president of Airbus in June (2012), I have made this issue one of the top priorities for the company," Bregier wrote to Li Jiaxiang, the government official in charge of the Civil Aviation Administration of China (CAAC).

A spokesman for Airbus declined to comment on the letter but reiterated that the company, a subsidiary of EADS, welcomed the EU's decision to pause the scheme for a year.

Bregier signed the two-page letter on November 16, four days after EU Climate Commissioner Connie Hedegaard agreed to "stop the clock" for a year on plans to make all airlines using EU airports pay for their emissions through a trading scheme.

The proposal unleashed a volley of international criticism and China - which viewed it as a breach of sovereignty - froze orders for aircraft worth up to $230 million each.

Bregier urged China to respond to the European Union's decision by swiftly granting approvals for all 45 aircraft.

While Beijing approved 18 orders worth $4 billion, more valuable deals remain on hold as China awaits the outcome of international talks on the problem of managing borderless emissions without infringing sovereignty.

PRESSURE TO ORDER PARTS

Bregier's letter sheds light on frantic efforts to unblock the orders as Airbus reached the deadline for ordering parts for the jets. According to his letter, the first aircraft was tentatively scheduled to be delivered in the summer of 2013.

Industry sources say a golden rule of the aerospace industry is that planes are never built without a firm order and deposit.

However, the schedule suggests Airbus may have been willing to show some flexibility, given China's role as the world's fastest-growing aviation market and a strategic trade partner.

Longest-lead-time components are ordered around a year in advance, meaning that if the planes are indeed to be delivered this summer, some parts would have been ordered last year.

The letter also gives the first available breakdown of the A330 orders, details of which have mostly been kept secret pending final approval from the Chinese government.

They include 10 aircraft for Air China, 10 for Hainan Airlines, 10 for China Southern and 15 for China Eastern. The letter said first deliveries were tentatively scheduled for mid-2013.

Airbus has not said which of these are included in the approvals for 18 aircraft announced on April 25.

It is not the first time high-profile plane orders have become swept up in trade tensions between China and Europe or the United States, home to Airbus's arch-rival Boeing.

Supported by India and the United States, China objected to the EU airlines plan on the grounds that it based charges on the whole trip, including China's jealously protected airspace.

The European Union says it was forced to act after more than a decade of inaction by the international community.

For internal EU flights the EU scheme remains in place and the European Union says it will re-impose the scheme for all flights using EU airports if global talks do not progress.

In practice, diplomats say that places the onus on the United Nations' International Civil Aviation Organization to reach a breakthrough during its general assembly from September 24.

The absence of a deal would raise the prospect of further deadlock over Airbus orders.

Aviation executives are expected to tackle the issue on Monday in Montreal, home to ICAO, where they are attending an Airbus-sponsored environment workshop.

(Additional reporting by Tim Hepher; Editing by Louise Heavens)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
StigTW wrote:
Was the US asleep allowing Europe to tax US airspace?
How is we only have China sticking up for their sovereignty.

May 12, 2013 9:48pm EDT  --  Report as abuse
Yamayoko wrote:
It’s more economical in money terms to manufacture planes that don’t conform to strict EU emission standards. Airbus supports itself in competitiveness more than China’s refusal to pay the carbon levy. What a hyprocrite!

May 12, 2013 11:45pm EDT  --  Report as abuse
SubramanianV wrote:
When it comes to Indian proverbs, there is nothing comparable to them which portray human nature so correctly and clearly: How right the proverb “The elephant displays one set of teeth, while eating with another!” is made for U.S.capitalism! Preach democracy and hobnob with communism when it is a question of self-interest!

May 13, 2013 2:43am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.