Says Sarkozy Visit Unrelated To Aircraft Sales

Ever-mindful of the political ramifications from doing business with a country known to be a state sponsor of terrorism, last week European Aeronautic Defense and Space Corp. (EADS) vehemently denied its Airbus division was on the verge of announcing a airplane deal with Syria.

"We are not currently discussing any deal on Airbus planes with the Syrian airline or authorities," an EADS spokesman told Reuters.

Talk of just such a sale came as French President Nicolas Sarkozy prepared for his visit to Damacus this week. Last November, a visit by Sarkozy to China yielded a 160-plane order for Airbus jets, though not without some last-minute hand-wringing.

Reuters reported Thursday on rumors Airbus had offered a deal to the Syrian government to reinvigorate its state-run flag carrier, Syrianair. In exchange for deals to purchase or lease 54 Airbus planes before 2028, the European planemaker would offer its assistance in helping to reorganize the airline. The news service said it talked with two separate, though unnamed, sources to confirm the Syria story.

Airbus has offered such quid pro quo deals before -- including to American carrier US Airways while it struggled through bankruptcy, and later to China in exchange for building a Chinese production facility for the A320 line. But this was the first time any reports of such a deal to a terrorist state have surfaced.

In addition to public outcry, Airbus would face two significant hurdles before it could sell one of its planes to Syria. For one, the deal would likely be halted by US sanctions imposed on Syria since 2004. However, one industry official told Reuters the sanctions could be circumvented by selling the planes to a leasing company, which would then lease the planes to Syria.

Regardless of the legality of the sale, EADS may have a bigger problem on its hands. Selling planes to Syria would add another political football for opponents of EADS' bid to sell the US Air Force new aerial refueling tankers to kick around.

It's likely EADS doesn't want to jeopardize a $35 billion Air Force procurement contract -- or the potential for more deals -- in exchange for a rather middling commercial order.

FMI: www.airbus.com