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Ryanair Seals Deal With China

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Irish budget carrier Ryanair Holdings PLC and state-owned Commercial Aircraft Corporation of China Ltd. are set to announce a cooperating agreement this week at the Air Show in Paris, according to a person familiar with the talks. The pact will focus on Ryanair, Europe's largest no-frills carrier, consulting with Comac on development of its planned C919 passenger jet, this person said. It will not be legally binding or entail any funding.

For Ryanair, the deal will offer an inside track with a potentially significant future supplier. More immediately, it could ratchet up pressure on Boeing Co., with which Ryanair has been in talks about a large order. The two failed to agree on a deal last year and Ryanair officials publicly criticized Boeing for its position. Ryanair flies only Boeing 737 jets. For Comac, these linkups are seen by many in the global aerospace industry as only a first step in China's ambitions to develop a civil aviation industry. Plane makers frequently consult with airlines on issues such as cabin layout and operating economics.

Comac is developing the C919 as a rival to the Airbus A320-family of aircraft and Boeing's 737. The two-engine, single-aisle C919 is slated to start flying in 2014 and begin service with Chinese carriers in 2016. The project has attracted major Western aerospace companies, including General Electric Co., to supply components and systems. The C919 is the most ambitious jetliner project developed in China. Airbus, a unit of European Aeronautic Defence & Space Co., now assembles its A320 model in Tianjin, but the components are almost all made in Europe and shipped to the Chinese plant. Other Western aircraft makers have also set up production facilities in China.

Comac has been courting major airlines outside China. Last July, the company signed an agreement with British Airways PLC to discuss aircraft design. The informal pact does not bind BA to buy any planes. The Ryanair pact with Comac will be similar to BA's, said the person familiar with the agreement. Ryanair officials have said over recent months they are talking to plane makers in China and Russia, but industry observers have dismissed the comments as bluster in its negotiations with Boeing.


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