February 4, 2010 / 10:40 AM / 9 years ago

RPT-AIRSHOW-UPDATE 2-Airbus eyes military,civilian deals in Asia

* Announces sale of 6 A330-200s to Hong Kong Airlines

* Indonesia a potential market for A400M

* To raise Asia outsource spending, seeks partner in Vietnam (Repeats to additional subscribers with no change to text)

By Harry Suhartono and Mariko Katsumura

SINGAPORE, Feb 4 (Reuters) - European aerospace giant Airbus has agreed to sell six planes worth $1.15 billion to Hong Kong Airlines and said it was looking to secure more deals in Asia, including for the troubled A400M military transporter.

Indonesia, which has plans to renew its C-130 transport airplane fleet, is a potential market for the A400M, said Christian Duhain, a vice-president at Airbus parent EADS EAD.PA, said on Thursday. [ID:nSGE613030]

John Leahy, Chief Operating Officer for Airbus, told Reuters on the sidelines of the Singapore Airshow that in terms of civilian deals, the company should finalise sales of wide-body A330 passenger jets to Asian customers in the next two weeks. [ID:nSGE61305H]

“We are working on a couple of deals right now, but again we are not going to rush to sign it just because of the airshow,” Leahy said.

“I have deals in this region for some A330s that we are close to wrapping up... we may have to wait until next week or maybe the week after,” he added without giving further details.

Airbus subsequently said it has a memorandum of understanding to sell six A330-200 aircraft to Hong Kong Airlines worth $1.15 billion [ID:nSGC003472].

The global economic recession resulted in a 3.5 percent decline in global air travel last year and a 10.1 percent drop in the volume of airborne cargo, according to the International Air Transport Association (IATA). [ID:nLDE60Q0TF]

Although some industry analysts and executives say that a recovery has started, others expect it will take years before airlines start to buy aircraft in large numbers.

“I think the industry will stay soft or pretty much in recession in terms of order intakes through 2012,” Leahy said.


Indonesia is looking to renew two squadrons, or 32 planes, of its Lockheed Martin (LMT.N) C-130 military transport planes, the government said last year.

This could be an opportunity for Airbus to sell the Southeast Asian nation the A400M, which can carry twice as much payload, twice the distance compared to the C-130s.

But the plane has run into funding difficulties. Later on Thursday, EADS and the main buyers of the A400M — Britain, France, Germany, Spain, Belgium, Luxembourg and Turkey — will meet in Berlin to resolve a 2.4 billion euro ($3.4 billion) funding shortfall to complete development of the plane. [ID:nLDE6130YW]

In Asia, Malaysia has agreed to purchase four A400M planes, with delivery scheduled for 2013.

The Indonesian deal is far from certain as competition will be tough and the country, Southeast Asia’s biggest economy, does not have the budget for fresh orders this year. Lockheed Martin is working with the Indonesian government to reduce the number of varieties of the C-130 on its fleet before deciding on a purchase of the newer series of the Hercules, a senior company official told Reuters. (Additional reporting by Nopporn Wong Anan, Fabian Ng and Kevin Lim in Singapore and Telly Nathalia in Jakarta; Editing by Raju Gopalakrishnan and Lincoln Feast)

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