AIRSHOW - Airbus rules out price war to hit order goal

General view of Paris airshow one day before the opening of the 48th Paris Air Show at the Le Bourget airport near Paris, June 14, 2009.

PARIS (Reuters) - European plane maker Airbus is not selling planes at bargain prices just to keep its order books filled, the EADS unit's chief executive said.

"We are not desperate. We have a huge order backlog," Tom Enders told journalists in remarks embargoed for Sunday.

Airbus sold 32 planes between January and the end of May.

For 2009, EADS expects it to receive "up to 300" orders for aircraft, but the company's focus is on maintaining deliveries rather than adding to an already robust order book, executives said ahead of the Paris Airshow at Le Bourget next week.

"We are aiming at 300, but it could be a number considerably lower," Enders said.

Both Airbus and rival Boeing have suffered as travel demand has dried up in the global economic downturn, prompting several airlines to cancel or defer orders.

Airbus is set to cut back its output of single-aisle airplanes to 34 from 36 and previously shelved plans to raise production to 40. It has also frozen plans to increase the A330/A340 production line from 8.5 units to 10 per month.

EADS Chief Executive Louis Gallois said Airbus would be ready to produce larger numbers of planes as soon as the economic environment improved.

"We are ready to raise our production again, and that is one of the challenges, to increase the production when it is needed. And it will be needed," he said, though it was too early to say when demand would start improving again.

"We have no visibility... We will see in 2010 what the depth of the crisis is," he added.

The world's airlines are expected to post 2009 losses of $9 billion, according to the latest forecast from the International Air Transport Association, which called the current crisis "the most difficult situation the industry has faced".

Enders said the top priority was to secure deliveries and work down the order book, well-filled with around 3,500 planes.

"We are talking about airlines that have ordered for growth or to replace older aircraft. Replacement orders are more secure than growth orders," he said.

FINANCING DIFFICULT

Airbus has significant overbooking for 2010 and 2011, meaning that the order book will remain well-filled even if individual customers cancel or defer orders, Enders said.

Some 40 percent of plane purchases by Airbus customers this year were backed by European credit agencies, he said. Customers pay for the bulk of new planes on delivery. Financing conditions remained difficult, albeit slightly improved, Gallois said.

In addition to financing, a recovery of the aviation industry would depend on improvements in traffic figures in air travel, which were still disappointing, a recovery of the global economy and the financial strength of airlines.

Gallois said talks with buyer countries to save the delayed A400M military transporter were "intensive and constructive".

Britain, which ordered 25 of the 180 planes earmarked for European NATO countries, has threatened to pull out of the project over delays but industry appears increasingly confident that Europe's top defence spending nation will stay on board.

"We will be hurt if the UK leaves the contract, but I do not think it would kill the contract. But we want the UK," Gallois said.

Seven European NATO countries have ordered the plane at a total cost of 20 billion euros, but engine development problems have delayed production. The A400M was due to be delivered in 2009 but has yet to make its maiden flight.

Gallois doubted EADS could recover over 2.5 billion euros of provisions made for the A400M on the first order of 180.

But he expected at least as many planes as the first order batch to be exported over the lifetime of the project. So far Malaysia and South Africa have agreed to buy 12.

"This airplane has a big future in export," Gallois said.