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Airbus clinches first airline customer for revamped jet

By Tim Hepher and Victoria Bryan

FARNBOROUGH England (Reuters) - Airbus clinched its first airline customer for a newly revamped model with a tentative deal with Malaysia's AirAsia for 50 A330neo wide-body jets worth over $13 billion on Tuesday.

The deal was sealed with a peck on the cheek from the French boss of Europe's largest planemaker for AirAsia founder Tony Fernandes, who told the Farnborough Airshow: "We're Airbus's largest plane customer and definitely the most loved".

The deal brings the tally of provisional orders for the upgraded and more fuel-efficient version of the A330 to more than 100 units after deals with three leasing companies.

The aircraft will be used by long-haul affiliate AirAsia X , which has long campaigned for extra fuel savings.

It is an aircraft that Airbus had not expected to make until recently but which it is gambling will put pressure on Boeing's much newer 787 Dreamliner in an order race for aircraft with 250-300 seats, ideally suited to growing intra-Asian travel.

Boeing has attacked Airbus's latest model as a rehash of tired metallic technology compared with its carbon-composite 787 Dreamliner, which also gathered new orders on Tuesday.

But Airbus and a trio of leasing company buyers said the A330 still made sense for airlines that do not need the full range capability of the 787 or its own A350, even though the smallest member of the A350 family is now sure to be axed.

Airbus Group chief executive Tom Enders said the response to the revamped plane, which was unveiled on Monday, showed it had made the right decision.

"Over 100 330neos by the second day is a good start for this new member of the family," he told Reuters.

KEEPING THE TILLS RINGING

The arrival of AirAsia injected sparkle into an air show dominated on its second day by financiers, who splashed out over $25 billion on bread-and-butter medium-haul, narrowbody jets as well as dozens of larger models.

Those deals involved names that mean little to most travelers but which keep the wheels turning of a $100 billion annual market for jetliners that remain in hot demand in emerging markets, as the West limps out of recession.

Confirming a Reuters report, Japanese-owned SMBC Aviation Capital signed the biggest deal of the show so far by number of units with a $12 billion order for 115 Airbus A320-family jets.

Airline deals have been few and far between at the world's largest showcase event, which coincides with growing concern about overcapacity and a string of airline profit warnings.

But leasing companies are putting their faith in steadily growing aviation traffic especially in Asia.

"We do see this as growing our business over the next 10 years," SMBC Chief Executive Peter Barrett told journalists.

GROWING HOPES FOR F-35

The air show has, however, brought renewed evidence of a battle for market share between Airbus and Boeing over sales of narrowbody jets, the backbone of most medium-haul networks.

It comes hard on the heels of two closely watched domestic contests in the UK where Monarch Airlines handed Boeing a critical win by dropping current supplier Airbus, while British Airways owner IAG stuck with Airbus after another duel.

Boeing began the air show with a clear advantage over its rival after gaining 703 gross orders up to July 8, or 649 after cancellations, against Airbus’s end-June total of 515 gross orders and 290 net.

But Airbus is clearly winning at the air show, having secured orders and commitments for 398 aircraft worth $60 billion, including 105 A330neos.

Boeing Chief Operating Officer Dennis Muilenburg said the U.S. company announced orders as it booked them, rather than saving them for the air show, and that it would have more news before the week was over.

The defense side of the show remained locked in suspense over the arrival of America's newest combat jet, the Lockheed Martin F-35.

The radar-evading jet missed its Farnborough debut on Monday after being grounded due to an engine fire, but U.S. military officials have approved a limited flight clearance along with engine inspections, the Pentagon said on Tuesday.

Pentagon spokesman Rear Admiral John Kirby said Washington still hoped the F-35 could fly at the show.

(Additional reporting by James Regan, Jason Neely, Andrea Shalal, Sarah Young and Jack Stubbs; Editing by Mark Potter)

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