Britain seals air tanker deal

By Tim Hepher

PARIS (Reuters) - Britain is set to announce a deal to buy Airbus A330 refuelling tankers after a bank loan rescued plans for the world's largest public-private funding project, sources close to the deal said on Wednesday.

The deal is expected to be announced on Thursday during a state visit to Britain by French President Nicolas Sarkozy, although it is not officially part of his programme, and comes weeks after a deal to supply similar jets to the United States.

"The financing is fully committed," a source close to the deal said. Others said plans for a bond linked to the initial financing phase had been dropped due to global market turmoil and had been replaced with a loan.

The first phase of the project calls for total capital investment of 2 billion pounds. The project is seen worth an estimated $26 billion (13 billion pound) over its 27-year lifetime.

Britain is buying the planes under its Private Finance Initiative, a funding scheme used in the past to lease public services such as hospitals from the private sector.

Officials say the deal, put together by Deutsche Bank (DBKGn.DE), is the world's biggest public-private partnership.

In 2005, the Royal Air Force selected a consortium of European aerospace firms to buy the aircraft from Airbus and lease them to the Ministry of Defence when needed. But talks over the financing have dragged on far longer than expected.

The AirTanker consortium includes Cobham (COB.L), Rolls-Royce (RR.L) and VT Group VTG. of Britain, the UK subsidiary of French electronics firm Thales TCFGP.PA and EADS (EAD.PA), the European parent company of Toulouse-based planemaker Airbus.