IAG airline group in advanced fleet talks -sources

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PARIS, Feb 23 (Reuters) - Airlines group IAG (ICAG.L) is in advanced talks with planemakers on a medium-haul fleet shake-up that may see the British Airways parent opt for Boeing (BA.N) and Airbus (AIR.PA) jets to update a European fleet of Airbus narrowbodies, industry sources said.

IAG stunned the industry nearly three years ago when it unveiled a tentative order worth $24 billion at list prices for 200 Boeing 737 MAX at the Paris Airshow in 2019, at a time when the jet was grounded worldwide in the wake of two fatal crashes.

The global outbreak of COVID-19 early the following year caused that deal - intended as a show of confidence in troubled Boeing by then IAG boss Willie Walsh - to lapse, and the airline group later started a formal contest between Boeing and Airbus.

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The sources said Boeing looked likely to keep a slimmed-down version of the order, potentially involving closer to 50 jets than the original blockbuster quantity of 200.

The multi-national airline group also owns narrowbody operators Aer Lingus of Ireland and Spain's Iberia and Vueling.

If a deal is confirmed in ongoing negotiations, Boeing's MAX is seen most likely to be deployed at Vueling and future low-cost operations at London Gatwick.

IAG (ICAG.L) also has options to order additional Airbus narrowbody aircraft, inherited from earlier purchases.

But firming up new Airbus orders has hit a hurdle as the European planemaker struggles to find available production slots after taking a lead over Boeing in the market for single-aisle jets.

Further Airbus orders may also depend on progress in negotiations over undelivered A350 aircraft, the sources said.

Airbus, Boeing and IAG all declined to comment.

IAG Chief Financial Officer Steve Gunning told analysts in November that the airline group would need some additional short-haul aircraft towards 2024 or 2025 and hinted that any order would include the 737 MAX.

"We think it's important to have strong competition between Airbus and Boeing. And we think the MAX is a very good aircraft," he told analysts.

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Reporting by Tim Hepher. Editing by Jane Merriman and Diane Craft

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