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Cargolux may buy five 747s, says China gloom overstated

An element of a wing of the dismantled Solar Impulse 2 aircraft is carried towards a Cargolux Boeing 747 cargo aircraft at Payerne airport January 5, 2015. REUTERS/Denis Balibouse

By Tim Hepher

LUXEMBOURG (Reuters) - Cargolux is in talks with Boeing to buy five more 747-8F freighter jets, the head of Europe’s largest all-freight carrier said on Tuesday.

Such a deal could be worth $1.9 billion at list prices.

The aircraft would serve a planned joint venture between Cargolux and its 35 percent shareholder Henan Civil Aviation Development & Investment (HNCA) to be based in Zhengzhou, north central China.

"At this moment the plan is to purchase another five 747s for the project which will be based in China, on top of the existing fleet,” Chief Executive Dirk Reich told Reuters after taking delivery of the 13th out of 14 of the 747-8 freighters that the Luxembourg-based carrier has already ordered.

Plans for 'Cargolux China' are expected to be finalised before the end of the year with a view to starting flights in early 2017, Reich said in an interview.

Cargolux already operates a hub at Zhengzhou, home to the main production base of Apple's primary iPhone assembler known as Foxconn.

Shipments from there have surged in recent weeks amid strong demand for the latest models, he said.

"Especially in the last weeks before the weekend of the (iPhone 6s) introduction, we have seen big shipments from China to all over the world particularly the U.S.," Reich said.

"It looks like the sales are in the same range as they were last year, so it is an early sign of the high season for air freight starting." The peak season is usually October/November.

Apple said on Monday it had sold more than 13 million iPhone 6s and 6s Pluses during their first weekend of availability in 12 markets, a record for its marquee product.

Despite fresh falls in share prices caused in part by economic slowdown in China, Reich remains optimistic about the world's second-largest economy.

"I think the uncertainty in China is overvalued. If you go and look at the production facilities particularly in the hinterland and look at consumption, goods of Europe are now being consumed by hundreds of millions of people in the hinterland," he said.

"It is true growth rates are no longer around 10 percent but we are absolutely confident we will see growth rates around 5 percent for the next years."

The International Air Transport Association says air freight volumes - a key barometer of world trade - fell 0.6 percent in July, compared with the same month in 2014.

The market remained weak and patchy in August, Reich said, adding the outlook was less gloomy.

"We see the climate as moderate to good. It is not as bullish as last year at the same time, but we are expecting a high season driven by high technology," he said.

"The biggest concern is exports from Europe. The U.S. is great and we are sure there will be a boom between China and the United States."

While the U.S. is drawing cargo from China and Europe, "on the route between Europe and China we have our question marks".

(Reporting by Tim Hepher; Editing by Susan Fenton and Susan Thomas)