KLM in talks to buy Airbus planes

KLM's deal to replace older planes may be worth about $1.6 billion

LONDON, England (CNN) -- KLM Royal Dutch Airlines, Europe's fourth-biggest airline, says it is in advanced talks to buy planes from Airbus Industries.

A deal is expected to be announced on Monday afternoon, KLM spokesman Bart Koster told CNN. The board of KLM is at the Farnborough Air Show in southern England putting the final touches to a deal.

Koster would not elaborate on the deal, nor would Airbus officials. They will hold a joint press conference should a deal be struck later this Monday.

The Dutch airline has said in March it would buy a number of Airbus A330-200s to replace 10 Boeing MD-11s and 12 767-300ERs.

Dutch daily De Telegraaf said last week KLM would sign an agreement to buy at least 12 Airbus A330 aircraft in a deal worth at least 1.5 billion euros ($1.6 billion). KLM said last week it was not yet clear how many planes it would buy outright, lease or take a buy option on.

Although the catalogue price for 12 A330-200s is about 1.5 billion euros, in a depressed global airline market KLM can expect to get a huge discount of up to 40 percent, according to some analysts.

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The airline industry has lost about $12 billion over the past year as traditional national flag carriers cut routes and jobs, and ground aircraft to counter the impact of an economic slowdown and the effects of September 11.

At the last Farnborough air show -- which alternates with Paris as Europe's biggest air show -- orders worth about $52 billion were taken, according to the show's organiser, the Society of British Aerospace Companies.

Those heady numbers are unlikely to be reached at this show because of the turmoil in the industry. (Full Story)

Phil Condit, the chief executive of Boeing, told Reuters surplus civil aircraft lying at desert airports in the U.S. could suppress new plane prices for several years.

European Aeronautic Defence & Space Co (EADS), which owns 80 percent of Boeing's arch-rival Airbus, was down 1.9 percent at 15.01 euros in midday Paris trading on Monday. KLM shares were 2.2 percent lower at 10.85 euros.