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Poland's LOT orders 40 A220 jets with options for 44 more

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Follows contest with Brazil's Embraer ( ERJ ) for regional jet

order

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LOT says decision make on purely economic grounds

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Analyst says deal part of reset in France-Poland relations

(Recasts after announcement, adds quotes)

By Tim Hepher, Paul Sandle and Joanna Plucinska

PARIS, June 16 (Reuters) - Airbus sealed a

landmark order for 40 A220 jets from Polish national carrier LOT

on Monday, marking the airline's largest-ever investment and

signalling a broader reset in political ties between Poland and

France.

The deal, which was first reported by Reuters on Friday,

follows a hard-fought contest between France-based Airbus and

Brazil's aerospace champion Embraer ( ERJ ) to capitalise on

Warsaw's plans to equip an ambitious new East European hub.

It ends LOT's longstanding reliance on non-European airplane

suppliers.

"This is the largest investment in the history of the Polish

national carrier. We are building a leader in air transport in

Europe," Polish Prime Minister Donald Tusk said on X.

LOT executives stressed the A220 had been selected purely on

economic grounds, with CEO Michal Fijol telling Reuters: "I only

do numbers". Airbus' roughly 130-seat small jet edged out the

smaller Embraer ( ERJ ) by a very narrow margin, he said.

But the large contingent of ministers and diplomats - from

Poland, France and Canada, where the A220 is mainly built - at a

packed news conference made clear the politics at stake.

"We have a good understanding of the economies of both

countries; if we have a good understanding of business people

from Poland and France it supports also the political alliance,"

Polish Infrastructure Minister Dariusz Klimczak told Reuters.

The year-long competition had attracted attention as LOT

offered a significant prize for that size of plane at a time

when it has been weighing alliances amid concerns about security

support from the U.S., according to aviation and defence

sources, diplomats and analysts.

In May, France and Poland signed a treaty to increase

cooperation on defence, nuclear energy and other measures, in a

sign of deepening alliances between European nations.

Poland's pro-European coalition government won a vote of

confidence last week, an outcome that Tusk hopes will give his

cabinet new momentum after it was shaken by a setback in a

recent presidential election.

In 2016, Poland cancelled a $3.5 billion deal for 50 H225M

Caracal military helicopters, sparking a furious public response

from both Airbus and the French government, which said it would

review defence cooperation with its eastern European NATO ally.

A220 BOOST

The A220 deal is worth up to about $3.5 billion, including

44 options that could eventually bring the order to a total of

84 jets, according to Cirium Ascend analysts.

"It is part of a major reset of Franco-Polish relations by

the Tusk government," said Paul Taylor, a senior visiting fellow

at the European Policy Centre.

"Part of this is to show that Poland wants to think European

and specifically wants to make goodwill gestures to France for

the rupture under a previous government, following the

cancelling of the Caracal contract."

Industry sources said Airbus, in which both France and

Germany hold 11% stakes, also eyes potential sales of military

equipment to Poland including MRTT tankers and A400M airlifters.

Asked whether Airbus saw the new deal as an opportunity to

rebuild bridges with Poland, Airbus commercial planemaking chief

Christian Scherer denied any connection with past disagreements.

The order is also a shot in the arm for the A220 programme,

which has plans for higher production but has had uneven sales

since Airbus bought it from Canada's Bombardier in 2018.

"This puts the A220 further on the path towards breakeven,"

said Agency Partners analyst Sash Tusa.

Embraer ( ERJ ) said it respected LOT's decision, while suggesting

that European politics had played a role.

"We understand we are living in an exceptional moment where

geopolitics play an important role," the Brazilian company said,

adding that it would continue to support LOT's existing fleet

that includes older Embraer ( ERJ ) jets as well as larger Boeings.