Agreement reached on aircraft export credits: Source

PARIS: Leading passenger aircraft manufacturing countries have reached agreement on reforming the contested system of export credits to boost sales, a source close to the negotiations said on Wednesday.

"An agreement was reached yesterday evening. It concerns Europe, the United States, Brazil and Canada. And the governments should approve it by February 1," the source said.

Major aircraft manufacturing countries have been holding talks for months at the Paris headquarters of the the Organisation of Economic Cooperation and Development ( OECD) on reforming the so-called export credits.

European manufacturer Airbus and Boeing of the United States have defended the current system, under which foreign buyers get government loan guarantees to help them to buy aircraft, saying it helps many foreign airlines to finance their aircraft purchases.

A number of big airlines in Europe and the United States oppose the current system, complaining that it unfairly supports their competitors in the Gulf.

A reform was also necessary to take into account new competitors in the passenger aircraft market such as the Brazilian company Embraer and Canadian Bombardier.

The French business daily Les Echos said on Monday that a compromise had been found that would extend the system to benefit US and European airlines.

A source said on Tuesday that the new system should satisfy in part the complaints of airlines such as Air Berlin, Air France, British Airways, Delta Airlines, Lufthansa, Virgin.

The source said that European and US airlines, which previously had not been able to benefit from the financing at very preferential rates meant to boost foreign sales, would under certain circumstances be able to get cut-rate financing.

The source said negotiators were still trying on Tuesday to reach an agreement on how many of the Airbus and Boeing contracts made before 2007 could still benefit from the current credits system.