China Southern Airlines will sign an agreement to buy 10 A330 jets from Airbus at a list price of about US$1.3 billion this week, a source close to the airline said.

The deal is part of 2 billion pounds (US$3.7 billion) in contracts to be inked between British firms and those on the Chinese mainland and India during British Prime Minister Tony Blair's four-day tour of the two Asian countries.

Southern Air and Airbus controlled by the European Aeronautic Defence & Space Co could ink their pact in Beijing as early as Tuesday, a Beijing-based Airbus executive told Reuters, declining to be identified.

If sealed, Southern Air's order represents a minor victory for Airbus as it vies with rival Boeing Co to dominate the global aircraft industry.

"China Southern will order 10 new A330s," the source close to the airline said on condition of anonymity, declining to elaborate.

"We're buying the planes because we want to further expand our fleet," another of the airline's executives told Reuters.

Analysts increasingly question if the Chinese mainland's airlines many of which were pushed into the red in the first half by soaring jet fuel prices should be spending so much on new planes.

But carriers argue they have to prepare for a surge in travel in coming years as increasingly affluent Chinese take to the skies. Some are bracing for competition from foreign rivals that are adding flights to the world's seventh-largest economy.

The Chinese mainland is therefore emerging as an important battleground between Airbus and Boeing.

In April, the mainland's carriers signed orders worth about US$3.2 billion for 30 Airbus aircraft, including five A380 superjumbos for China Southern and others for China Eastern Airlines Corp and Shenzhen Airlines.

Boeing predicts the Chinese mainland would become the world's second-largest commercial aviation market, behind only the United States, within two decades. It estimates the country will need 2,300 planes over the next 20 years.

The catalogue price of an Airbus A330 is about US$130 million apiece. Carriers seldom disclose the prices at which aircraft purchases are sealed, because jet makers often dole out significant discounts on their catalogue prices.

China Southern operates just four of the medium-range A330s, which can carry about 300 passengers each, Airbus said on its website (www.airbus.com).

In July, Airbus said Air China had signed a contract for the purchase of 20 Airbus A330-220s, scheduled for delivery from May 2006.

Airbus is 80 per cent owned by EADS of Germany and France, and 20 per cent owned by Britain's BAE Systems Plc.

(China Daily September 6, 2005)