By Joe Brock, Tim Hepher, Giulia Segreti and Paul Sandle
PARIS (Reuters) -Airbus struck a deal with budget airline VietJet for up to 150 single-aisle jets at the Paris Airshow on Tuesday, where industry hopes for a return to tariff-free trade were given a boost by U.S. Transport Secretary Sean Duffy.
Duffy said he wanted civil aviation to return to a 1979 zero-tariff trade agreement, in one of the clearest signs yet that the Trump administration might favour such a move.
However, Duffy added that while the White House was aware that the U.S. is a net exporter in aerospace, it was also dealing with a complex tariff situation.
“Now, again, you look at what free trade has done for aviation. It’s been remarkable for them. It’s a great space of net exporters,” he said. “And so the White House understands that, but if you go over there and you see the moving parts of what they’re dealing with, it is pretty intense and it’s a lot.”
U.S. President Donald Trump’s sweeping 10% import tariffs are a headache for an industry already battling supply chain challenges and facing fresh turbulence from last week’s deadly Air India crash and conflict in the Middle East.
In early May, the U.S. Commerce Department launched a “Section 232” national security investigation into imports of commercial aircraft, jet engines and parts that could form the basis for even higher tariffs on such imports.
Airlines, planemakers and several U.S. trading partners have been lobbying Trump to restore the tariff-free regime under the 1979 agreement.
On day two of the air show, European planemaker Airbus signed a provisional deal for VietJet to buy 100 A321neo planes, with the option to buy up to 50 more in future.
Vietnam’s largest private airline operates an all-Airbus fleet, apart from two Chinese-made regional jets. The airline has not to date taken delivery of any of the around 200 MAX planes it has ordered from Boeing.
Airbus is the main supplier of jets to Vietnam, accounting for 86% of the planes currently operated by Vietnamese airlines. However, the export-dependent Southeast Asian country is under pressure from Washington to buy more U.S. goods.
VietJet Chairwoman Nguyen Thi Phuong Thao said the scale of the airline’s orders was backed by plans to develop a major aviation hub in Vietnam, which Airbus says has seen its aviation market grow by 7.5% a year.
A deal for 150 A321neos could be worth around $9.4 billion, according to estimated prices provided by Cirium Ascend.
The agreement was the latest in a flurry of business announced by Airbus at the world’s biggest aviation trade fair.
AIRASIA FINALE
U.S. rival Boeing was having a subdued show and parking announcements as it focuses on the probe into last week’s fatal crash of an Air India Boeing 787 and after it racked up huge deals during Trump’s recent tour of the Middle East.
Attention turned to another big Airbus customer, AirAsia, long associated with buzzy show finales and looking at buying 100 A220s, with Brazil’s Embraer seeking to wrest away the deal after losing a key contest in Poland, delegates said.
Airbus was also expected to reveal Egyptair as the airline behind a recent unidentified order for six more A350s.
But its hopes of using the event as a showcase for its first significant deal with Royal Air Maroc faded after the airline postponed plans to announce a larger Boeing deal, delegates said.
None of the companies involved in last-minute air show negotiations agreed to comment.
Airlines have been battling the engine industry over long waiting times for repairs on the latest generation of engines in the busiest part of the market for workhorse narrow-body jets.
Pratt & Whitney commercial engines head Rick Deurloo said durability was top priority and the number of aircraft out of service while waiting for engine repairs was stabilising.
Rolls-Royce CEO Tufan Erginbilgic told reporters it was “even more true” that the British jet engine maker wanted to re-enter the narrow-body market, preferably via a partnership.
On the defence side, analysts are expecting a flurry of deals as European companies tap into a surge in arms spending.
Leonardo CEO Roberto Cingolani said he saw advantages to new entrants joining an Italian-British-Japanese next-generation fighter jet programme, particularly in terms of technology, but added that it would be a decision for the governments involved.
He said the addition of Saudi Arabia to the Global Combat Air Programme – something that has long been mooted – would open up a big market with great potential.
(Reporting by Joe Brock, Tim Hepher, Giulia Segreti and Paul Sandle. Editing by Mark Potter)
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