Airbus seals VietJet deal as hopes rise at air show for tariff rollback
PARIS : 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 per cent 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 per cent 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 per cent 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.
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While Trump has no qualms about touting unimpressive (or worse) deals as historic breakthroughs, he surely feels pressure to strike an agreement that is somehow better than the JCPOA that then-US President Barack Obama negotiated a decade ago. Given this, Trump probably views Israel's strikes as useful in limited doses – just enough to increase his leverage in the nuclear negotiations that were already underway. But Netanyahu is fighting for his political survival – and in that battle, no bridge is too far. While Israel initially focused its attacks on nuclear facilities and ballistic missile bases, the conflict has escalated to include targets that could draw the US into the war (such as energy facilities and residential buildings), and it is just getting started. In line with his grand Churchillian ambition – and mirroring the perspective he has brought to his war against Hamas in Gaza and Hezbollah in Lebanon – Netanyahu is seeking 'total victory' over Iran. 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Notably, despite having poured billions of dollars into its regional proxies in recent years, it has refrained from activating them – however diminished they may have been rendered by Israel – against American or Arab targets. But if Iran finds itself with its back against the wall, it can force a reluctant Hezbollah and its Iraqi militias into the fight. If not now, when? It is for occasions like this that the alliances were created in the first place. Iran can also incite attacks against Israel elsewhere, such as the West Bank. Moreover, it will probably withdraw from the Nuclear Non-Proliferation Treaty, opening the way for it to achieve nuclear breakout – a process that would take mere months. Iran now risks falling into the same strategic trap that drained the energies of the Sunni pan-Arabism it revolted against in 1979. By pouring its energy and resources into a war of annihilation against Israel, it would jeopardise its primary objective: regime survival. But Iran is not alone in letting illusory ambitions cloud its judgment. If Israel cannot destroy Iran's nuclear programme, it certainly cannot achieve total victory over Iran's regime. And it is not just Iran: none of Israel's security challenges can be overcome through total victory. No matter how many bombs Netanyahu drops, diplomacy will remain the only answer. Meanwhile, Israel's military hubris is becoming inadmissible to its moderate Arab allies. They wanted Israel as an equal partner in a regional peace, not as a new hegemon.
