EADS Says A330 Boost Is Hostage to China Views on Carbon Tax

Airbus SAS’s (EAD) capacity to increase A330 production to 11 aircraft a month by 2014 from 9 is hostage to China, which may forego deliveries to protest Europe’s plan to tax carbon emissions, the head of the parent company said.

China has 35 A330s scheduled for delivery over the next few years, including 25 for which Airbus is already building parts, and the country may refuse to accept the planes to punish the European Union for taxing emissions, European Aeronautic, Defence & Space Co. Chief Executive Officer Louis Gallois said today in a briefing.

China is among 27 countries that have said they will consider retaliatory steps following the European Union’s extension of its carbon market to aviation. The EU decided in 2008 that aviation should become part of its cap-and-trade carbon program after airline discharges in Europe doubled over two decades.

“We would like to see a solution on a global level,’ Gallois told journalists today. “We don’t think that a solution unique to Europe is appropriate.”

China is also threatening to block delivery of 10 A380 superjumbos that are on order with Hong Kong Airlines, Gallois said today.

European levies on carbon emissions from airplanes will cost Chinese airlines 800 million yuan ($127 million) this year, Li Jiaxiang, the head of the Civil Aviation Administration of China, told reporters March 5 in Beijing.

Chinese carriers with planes scheduled for delivery couldn’t immediately be reached for comment.

To contact the reporter on this story: Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editor responsible for this story: Andrew Noel at anoel@bloomberg.net

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