Officials say Boeing has cut its price

Taiwan still has a lot of bargaining chips in China Airlines' aircraft procurement plans, as the US-based Boeing company has reportedly offered to lower its price, government officials said yesterday.

"There's no hurry. We still have a lot of bargaining chips in our hands," said a source at the Presidential Office.

While Boeing reportedly offered to cut its price by US$300 million yesterday, China Airlines, however, dismissed the speculation.

"We have not yet received any information about a price cut," said an official from China Airlines, who requested anonymity.

China Airlines' US$2 billion-to-US$3 billion purchase plan for up to 16 mid-range commercial jets is aimed at finding a suitable replacement for its six A300-600Rs.

In addition to steep discounts totaling a reported US$410 million, the offer from European-based Airbus for its A330-300 series aircraft boasts savings on training due to commonality in cockpit design and operations, with Airbus jets already owned by China Airlines.

By contrast, Boeing's offer of the 777-200ER, provides long-haul ability and a large interior, allowing extra passengers and greater cargo capacity.

China Airlines' apparent preference for Airbus has prompted the US government to launch a lobbying campaign to convince China Airlines to make the purchase from Boeing instead.

On July 15, the new director of the Taipei office of the American Institute in Taiwan (AIT), Douglas Paal, visited President Chen Shui-bian (陳水扁) to promote the Boeing jetliners.

The political angle to the deal captured headlines when Chen Shih-meng (陳師孟), secretary-general to the president, said that China Airlines should consider purchasing aircraft from Boeing because of the US' firm support of Taiwan, while he said previous dealings with the French government have been unpleasant.

Government officials conceded yesterday that the deal is more than a purely commercial act, but said they would try to strike a balance between politics and business.

But during a one-hour interview with Spanish-language news agency Agencia Efe yesterday morning, Premier Yu Shyi-kun said that the Executive Yuan would not intervene in the matter.

"We'll let China Airlines take care of it. No matter what the final outcome may be, it has to be a professional one and take into consideration Taiwan's national interest and abide by WTO-related rules," he said.

The government owns over 70 percent of China Airlines' shares.

Government Information Office Director-General Arthur Iap (葉國興) said that it is to the government's advantage that the two companies are competing with each other.

"It's still too early to talk about politics now, as professional and cost factors should be considered first at this stage of the negotiations," he said.

Iap also said he was unaware of reports that the EU trade chief had sent a letter to the premier expressing concern that pressure from the US government could be in violation of WTO rules.

"I don't know anything about this matter," he said.

Iap, however, said that it would be natural for the EU to make such a move.

"It can be expected that a complaint letter would be filed by a potential seller through appropriate channels if the party thought it had been treated unfairly in a free market," he said.