June 19, 2018 / 2:42 PM / a month ago

Airbus seeks China deal after diplomatic gaffe: sources

PARIS (Reuters) - Airbus (AIR.PA) is in talks to rescue a plane sale to China thrown into doubt earlier this year shortly after a perceived gaffe by two European envoys over China’s sensitive historical relationship with Japan, people familiar with the matter said.

Logo of Airbus is pictured at the Airbus A380 final assembly line at Airbus headquarters in Blagnac, near Toulouse, France, March 21, 2018. REUTERS/Regis Duvignau

The Airbus talks come as France’s prime minister embarks this week on a trip to Beijing and as the United States threatens new tariffs on Chinese goods. French officials cautioned there were no signs of an imminent airplane deal.

State-controlled China Eastern is seeking 150 single-aisle jets like the Airbus A320 or the competing Boeing (BA.N) 737, industry sources said.

China’s ICBC Financial Leasing has also expressed interest in placing an Airbus aircraft order, the sources said.

The fate of a landmark Chinese order for 180 Airbus jets was left uncertain in January when French President Emmanuel Macron unexpectedly failed to clinch the order during a Beijing visit. China often marks such visits with industrial deals.

A person familiar with the January negotiations said they had been complicated by the fallout from comments published by French and German envoys over the 1937 Nanking Massacre, in which China says Japanese troops killed 300,000 people.

In an op-ed piece in the Financial Times in December, French and German ambassadors to China cited the political, economic and social dividends of post-war reconciliation between France and Germany and drew a thinly veiled comparison with China.

“Will it be possible to transfer the experiences of Europe to Asia? We cannot answer this question. But it is important to us to share our own experiences in the context with the anniversary of the beginning of the Nanjing massacre.”

Two people familiar with the matter said Chinese officials reacted coolly to the piece, deeming it unwarranted foreign advice on a painful episode in China’s history.

The first person familiar with the talks said this had slowed preparations for Macron’s visit, meaning that the necessary advance work for a plane sale and other deals had not been completed in time.

A French diplomatic source acknowledged that the article triggered a negative reaction but said there was no evidence that it was linked to the outcome of the plane talks.

Macron’s office and Airbus declined comment. German officials were not immediately available. The Chinese foreign ministry did not respond to a request for comment.

Separately Hainan Airlines has emerged as the buyer in a deal for 15 A350 passenger jets, industry sources said. Airbus disclosed the order without identifying the buyer this month.

Additional reporting by Elizabeth Pineau in Paris, Andrea Shalal in Berlin and Brenda Goh in Shanghai; Editing by Richard Lough

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