Airbus, Boeing fight over $2 billion deal

Agence France-Presse, Taipei

Competition between Boeing Co. and Airbus to sell up to 16 jets worth an estimated US$2 billion to Taiwan's China Airlines (CAL) has intensified with strong diplomatic lobbies, it was reported here Wednesday.

Boeing executives led by de facto U.S. ambassador in Taiwan Douglas Paal met President Chen Shui-bian Tuesday and the U.S. aircraft maker had also mobilized dozens of congressmen to lobby for the package, the Commercial Times said.

The U.S. has been Taiwan's leading arms supplier despite the lack of diplomatic ties since it switched recognition to Beijing in 1979.

Meanwhile, France, Germany, England and Spain, which hold shares in Airbus, had emphasized to Taipei representatives in their countries the deal's importance for the island's relations with the European Union, the paper said.

The envoys were told Taiwan would violate the World Trade Organization's spirit for fair trade and jeopardize its attempt to expand presence in the EU market if it bowed to Washington's political pressure, the paper added.

Taiwanese opposition politicians have also alleged several high-ranking local government officials were lobbying for the deal in favor of Boeing.

Airbus appeared to have an upper hand with a reported offer $410 million lower for the package, while Boeing had asked CAL to delay its decision from July, the Times said.

CAL chairman Y.L. Lee told the United Daily News no deadline was set for the purchase and the company was carefully evaluating on the proposals.

Transportation and communications minister Lin Ling-san, who also heads the China Aviation Development Foundation which holds a 70-percent stake in CAL, had said he would respect the airlines' own decision.

CAL, Taiwan's largest airline company, is planning to buy 16 new planes and requires the supplier to purchase its six used Airbus 340s.

Airbus had quoted CAL $127 million for an A330 and offered to buy back the A340s for $86 million a piece, the paper said last week. Boeing wanted $132 million for a 777 jet and had offered to buy the used planes for $31 million each.

CAL is speeding up plans to upgrade its fleet after one of its Boeing 747-200 passenger jets disintegrated in mid-air before plunging into the Taiwan Strait on May 25, killing all 225 people onboard.

It now operates a fleet of 41 passengers and 15 cargo aircraft with an average 5.8 service years.