Airbus in talks on China jet order ahead of Xi visit, sources say

By Tim Hepher and Sophie Yu

PARIS/BEIJING (Reuters) -Airbus is in talks with China over a potentially major aircraft order ahead of a visit to France by Chinese President Xi Jinping, two people familiar with the matter said.

The Chinese leader is due to make his first Europe trip in five years next month and diplomatic sources have said trade will be high on the agenda, amid mounting EU-China tensions.

China has historically signalled large jet orders timed to coincide with state visits, but the negotiations between Airbus China's CASC buying agency are expected to go down to the wire and are not guaranteed to result in a deal, the people said.

One of the people said a package could involve hundreds of jets, but the other cautioned talks are at a preliminary stage.

Airbus declined comment and CASC could not immediately be reached for comment.

In April last year, Airbus agreed to build a second Chinese assembly line or its A320neo narrow-body family during a state visit to China by French President Emmanuel Macron in a move to strengthen access to the world's second-largest aviation market.

Airbus, which has overtaken Boeing as a supplier to China during a deepening rift between Washington and Beijing, also got the go-ahead to deliver 160 jets already sold, but European hopes of new orders did not materialise during that visit.

Now, the parties are again involved in talks over a potentially large-scale order ahead of the return visit, with the results hinging in part on the political climate, the people said, asking not to be identified on confidential matters.

The date of Xi's visit to France has not been confirmed but diplomatic sources have cited May 6-7.

Macron was given an unusually lavish reception during his Beijing visit last year, viewed by analysts as a sign of China's charm offensive towards key nations from the European bloc to counter the United States.

But since then, ties have been clouded by trade issues.

Paris backed a European Commission anti-subsidy probe into Chinese electric vehicle imports, whose dominance in the EU market threatens European firms. France also introduced consumer subsidies for European-made EVs last December.

Airbus says China's traffic will grow by 5.3% annually over the next two decades, outstripping a global average of 3.6%.

In the past, China has tended to split jet purchases between Airbus and Boeing but deals with the U.S. planemaker have slowed significantly in recent years amid trade or political tensions.

(Reporting by Tim Hepher; editing by David Evans)