* Airbus tempers expectations of larger A220 launch -

sources

* Launch at Farnborough air show in July 'not probable' -

source

* Planemaker had been more bullish at start of the year

* A220 program in the red; bigger model could bring cost

benefits

* Airbus spokesperson: "We are studying all the options"

By Tim Hepher and Allison Lampert

PARIS/RIO DE JANEIRO, June 5 (Reuters) - Airbus

is wavering over when to launch a larger A220 jet due to a muted

response from powerful leasing companies and a debate over range

and performance, six industry sources said.

After whetting the appetite of buyers earlier this year for

a launch as early as this summer's Farnborough Airshow, Airbus

has since toned down expectations.

A senior Airbus executive said that a launch at Farnborough,

being held in late July, was now "not probable", although the

planemaker has not ruled out it happening this year.

"We are studying all the options; no decisions have been

made," said an Airbus spokesperson.

A larger version of the A220 would let Airbus renegotiate

supplier contracts and lower production costs, which could help

it turn around the loss-making programme it bought for a dollar

in 2018, after Canada's Bombardier ran short of cash.

The A220 programme remains in the red and has been losing orders

to Brazilian rival Embraer ( EMBJ ).

Insiders say Airbus has been touting a relatively modest

upgrade known as a "simple stretch" with no increase in maximum

takeoff weight or costly upgrade in the Pratt & Whitney

engines.

The plane would carry some 180 people, up from 160 now,

which would lead to a reduction of around 10% in costs per seat

but less range, said two people familiar with the project.

Not all airlines want to give up range, narrowing the pool

of potential customers. And airlines gathering in Brazil for an

IATA summit this weekend are also still smarting from durability

problems on existing Pratt & Whitney engines.

"Airlines are possibly sold on the economics, but not

necessarily the performance," aviation analyst Rob Morris said.

Pratt & Whitney parent RTX declined to comment.

'BIG YEAR' FOR THE A220?

Airbus was more bullish in January, telling financiers on the

sidelines of the Airlines Economics conference in Dublin that

2026 would be a "big year" for the A220, sources said.

Five months on, potential buyers say they have yet to

receive details that would be expected if the plane were close

to being launched.

"One of the questions we'll have to examine is the range ⁠of

​the aircraft," Air Canada's ( ACDVF ) chief operations officer Mark Nasr

told Reuters this week.

Pressure to come up with something new also eased when

AirAsia placed an order for 150 of the existing model.

"It remains a matter of when ... rather than if, but it's

not now," Airbus CEO Guillaume Faury told reporters in April,

referring to the launch of the larger A220.

Airbus is also studying the possible impact on sales of its

key A320neo narrow-body family, which sits just above the

proposed A220-500 in size, two people close to the matter said.

Lessors are also worried about hurting A320neo values.

"Lessors are so exposed to the A320 that the last thing they

need is a new anything; the less disruption the better off they

all are," a senior industry source said.

Aviation analyst Morris said that should not delay the

project indefinitely.

"The A320 lessors should be okay: the market for the plane

has sufficient liquidity and a strong customer base," he said.