China Southern buys 10 Airbus A330s for 1.5 billion usd

"A purchase agreement was signed by Southern Airlines and China Aviation Import and Export Company for 10 Airbus A330s," said a Chinese official of a deal witnessed by British Prime Minister Tony Blair and Chinese counterpart Wen Jiabao.

"The deal is worth 1.5 bln usd," added a British official, according to Agence France-Presse.

The A330 is a twin-engine regional and medium-haul airliner capable of carrying up to 311 passengers.

Iain Gray, managing director of Airbus UK, said the planes will be delivered in 2007 and 2008. No decision has yet been made on who will supply the engines.

"This is a new contract," he told reporters. "China is an important market for Airbus. It's good news that they (deals) are coming regularly.

"If we look to the future, China is a hugely important market so this reinforces the importance of the Airbus product, the A330 product in particular, in China."

Eight of the 10 jets are A330-300 models which are designed for domestic and regional services. The other two are A330-200 models for longer range operations, he said.

Airbus is 80 pct owned by aerospace conglomerate EADS and the rest by British defence contractor BAE Systems.

China desperately needs more planes to meet demand, with 121 mln passengers carried last year, a 16 pct rise from 2003 and twice as fast as the world average, Chinese statistics show.

It has made the country one of the world's three major aviation markets after the US and Europe.

The agreement was one of two aviation pacts sealed during Blair's visit.

In the other, the European Investment Bank signed an agreement to provide 500 mln euros in credit to fund the expansion of Beijing Capital Airport.

The credit is the largest extended outside of Europe by the bank, EU officials said.

Earlier media reports said the low interest rate credit is for a term of 25 years.

Beijing is planning a major expansion of the airport before the 2008 Olympics, while airlines in China have been updating their fleets in anticipation of growing travel demands in the runup to the Games.

Only last Wednesday China Southern finalized a 1.2 bln usd deal to buy 10 Boeing 787 aircraft.

That deal was part of a broader agreement signed in January in which six Chinese airlines agreed to buy a total of 60 of the jets worth 7.2 bln usd.

And in July Air China signed a contract to buy 20 Airbus A330 jets worth 3.1 bln usd.

In the next two decades, Airbus has said it sees potential sales to China of some 1,600 aircraft. Arch rival Boeing, which currently has a 62 pct market share, predicts more than 2,000.

For Boeing and Airbus China's demand is a bonanza, with the US manufacturer earlier this year estimating that Chinese airlines will need to spend more than 180 bln usd to meet these targets.