Airbus bags Saudi order as Franco-Israeli dispute rocks air show

By Giulia Segreti, Paul Sandle and Tim Hepher

PARIS (Reuters) -Airbus bagged a $3.5 billion plane order from Saudi Arabia's AviLease on the opening day of the Paris Airshow on Monday, as a diplomatic dispute erupted over France's decision to shut down four Israeli stands for displaying deadly weapons.

Delegates expect this year's iteration of the world's biggest aviation trade show to see less business than usual, partly due to last week's deadly crash of an Air India Boeing 787 and also because Boeing racked up huge deals during U.S. President Donald Trump's recent tour of the Middle East.

But Airbus looks set to close a series of sales on its home turf, and interest in the defence side of the show is high as Europe ramps up military spending and conflict between Israel and Iran escalates.

Tensions between long-standing allies France and Israel flared up as the show was getting underway, when Paris ordered the main four Israeli company stands to be closed down when they refused to remove offensive weapons from display.

Israel's ministry of defence condemned the move as "outrageous and unprecedented" and accused France of trying to shield its companies from Israeli competition.

The show organisers said they were holding talks to try to "find a favourable outcome to the situation".

Boeing's CEO Kelly Ortberg and Commercial Airplanes boss Stephanie Pope have cancelled their trip to Paris and the U.S. company is scaling back its schedule at the event as it focuses on supporting the probe into last week's Air India crash that killed more than 240 people and was the first for its 787 model.

Another Air India Boeing 787 bound for New Delhi returned to its origin of Hong Kong as a precautionary measure on Monday after a technical issue was suspected mid-air.

But Airbus was busy at the show working on deals.

Saudi leasing company AviLease said on Monday it had ordered 30 Airbus A320neo single-aisle jets and 10 A350 freighters in its first direct deal with the European planemaker.

That would be worth around $3.5 billion, according to estimated prices from analysts Cirium Ascend. The two companies did not give a value for the deal, which could increase to 77 jets if AviLease exercises options to buy more of both models.

Two people familiar with the matter also told Reuters that Polish airline LOT was poised to announce an order for 40 Airbus A220 plus options for a further 44 aircraft.

Brazil's Embraer had pushed hard for that deal, sources said. None of the parties agreed to comment.

Airbus is also the front-runner against the same planemaker for a potential order for dozens of A220 jets from AirAsia, sources said.

(Reporting by Joe Brock, Tim Hepher, Paul Sandle, Giulia Segreti. Additional reporting by Steven Scheer in Jerusalem. Editing by Mark Potter)