Airbus to sign deal with China

Airbus is set to sign memorandums of understanding with the Chinese government to help fund development of the A3XX superjumbo, the 800-seat behemoth that the company hopes will help it to topple Boeing from market leadership in the world civil aerospace market.

Close observers of the aerospace industry believe Airbus is hoping to come away from President Jacques Chirac's visit to Beijing next month with a deal to farm out part of the development work on the jet, the final cost of which has been estimated at between $10bn (pounds 6.2bn) and $15bn.

President Chirac's visit is also expected to coincide with the signing of a $1.2bn deal to supply aircraft to China's fast-growing civil airline industry.

It will be the largest deal of its kind between the European consortium and China, and follows the watershed deals to supply $300m-worth of A319s and A320s, signed last year, and the agreement to work jointly on the development of a 100-seater regional jet.

A spokeswoman for Airbus said the company "is in talks with various manufacturers around the world, including Asia, about participation in the development of the A3XX". She added that it was company policy not to comment on market rumours.

However, sources close to the company confirmed that China is top of the hit list for external partners in the A3XX project, which Airbus has said will require 40 per cent outside participation.

"We are not going to make any predictions, but inevitably the subject will come up and we remain hopeful," said one source.

Analysts also believe that the need to farm out up to 40 per cent of the development costs of the A3XX will affect the forthcoming change in the company's structure from a Groupe d'interet Economique (GIE) to a more conventional corporate entity.