Airbus begs China to buy from them

China's decision to ease a boycott of some $11 billion (7.16 billion pounds) in Airbus jet orders followed a high-level appeal from the planemaker urging Beijing to recognise 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-pedalled on its Emissions Trading Scheme last November (Xetra: A0Z24E - news) , 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.

(Barbara Lewis - Reuters)