July 9, 2018 / 9:08 AM / 9 days ago

Aeroflot in talks to expand A350 jet order - sources

PARIS/MOSCOW, July 9 (Reuters) - Russia’s Aeroflot is in negotiations to conclude an expanded order for up to 28 Airbus A350 passenger jets worth $7.8 billion at list prices, two industry sources said.

The long-awaited deal would double an order for 14 aircraft that has been on Airbus’s books for almost a decade without being fulfilled as the airline went through economic upheavals.

Aeroflot and Airbus declined to comment.

In 2007, Russia’s biggest airline ordered 22 A350s including 14 of the baseline A350-900 version and eight of the smaller A350-800, which Airbus later withdrew due to weak demand.

Also that year, Aeroflot signed a contract for 22 Boeing 787 Dreamliners but later said it had cancelled the order. The deal, however, remains on Boeing’s catalogue of unfilled orders, indicating the contract has not been formally severed.

Russian aviation market conditions were particularly challenging in 2015 and 2016, after sanctions by the United States and Europe, along with weak oil prices, hit the Russian economy and the rouble, hammering consumer demand.

Demand started to recover along with the economy, and Aeroflot has benefited from its scale and the bankruptcies of Russian carriers Transaero in 2015 and VIM Airlines this year.

One of the sources said Aeroflot was now discussing doubling the unfulfilled A350 order to 28 aircraft. Another predicted a total order for 25 airplanes.

Aeroflot recently reported a first-quarter net loss of 11.54 billion roubles ($184.49 million) as fuel and staff costs outweighed revenue growth.

The 95-year-old carrier, however, said it would set “more ambitious strategic goals”, having achieved its long-term 2025 ambitions to become a top-20 airline globally and top-five European airline ahead of schedule.

Aeroflot sees transit passengers between Europe and Asia, as well as its low-cost subsidiary Pobeda, as key growth drivers. (Reporting by Tim Hepher and Gleb Stolyarov; Editing by Mark Potter)

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