April 26, 2012 11:45 pm

China Eastern orders 20 Boeing 777s

China Eastern Airlines is set to order up to 20 Boeing 777 widebody aircraft, in a deal valued at up to $6bn at list prices.

The order comes as Airbus, the European jet maker and Boeing’s chief rival, struggles to finalise a $3.5bn deal to sell 15 A330 widebody aircraft to China Eastern.

The Airbus order has been put on hold because of China’s objections to European Union proposals that will oblige foreign airlines to comply with its carbon emissions trading scheme, according to people familiar with the situation.

The Boeing deal is likely to reinforce European aerospace industry fears that the sector could be caught in a global trade war because several countries, including China, India and the US, object to the EU carbon scheme.

Boeing and Airbus declined to comment. China Eastern could not be reached.

Boeing’s deal with China Eastern, set to be unveiled on Friday, would highlight the popularity of the 777 aircraft with airlines on their long-haul routes.

Airbus’s ability to compete for wide-body orders has been dented by delays with its planned twin-aisle A350 aircraft. The A350 is supposed to be the company’s answer to Boeing’s new twin-aisle 787 aircraft.

The company’s political problems in China arise from Beijing’s opposition to the EU carbon emissions trading scheme, under which all airlines flying to European airports must pay for their pollution.

Last month, Airbus claimed state-controlled Chinese carriers were holding back on finalising orders for widebody aircraft potentially worth $14bn, and urged the EU to suspend the inclusion of airlines in the carbon scheme.

But the European Commission rejected Airbus’s plea and EU member states, including Germany and the UK, backed the extension of the carbon scheme to airlines.

The International Air Transport Association, which represents 240 airlines, accepts the case for regulating airlines’ carbon emissions but argues that a global scheme should be devised by the International Civil Aviation Organisation, a UN agency.

Some European airlines fear they could be hit by retaliatory measures from countries outside the EU that object to its carbon scheme.

In December, the European Court of Justice ruled that foreign airlines must comply with the carbon scheme in a challenge brought by US carriers.

However, the US responded by saying the ruling had not resolved Washington’s objections to the carbon scheme.

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