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UPDATE 1-AIRSHOW-Viva Air Peru seen near $5 bln Airbus deal at Paris Airshow

(Recasts, adds further expected deals, background)

By Tim Hepher

PARIS, June 18 Low-cost carrier Viva Air Peru looked close to reaching a roughly $5 billion deal with Airbus for medium-haul jets on Sunday, as Western planemakers seek to defy expectations of slow sales at this year's Paris Airshow.

The Peruvian startup is set to order about 30 recently upgraded A320neo jets and 15 current-generation models known as A320ceo from Airbus, two industry sources told Reuters.

A spokesman for Airbus had no comment.

Viva Air Peru, which won an operating licence earlier this year, is owned by Irelandia Aviation. Neither firm could be reached for comment.

Apart from Monday's expected launch of a new version of Boeing's 737 MAX that could net the U.S. planemaker in the region of 150 orders, most industry analysts have muted expectations for orders going into the June 19-25 event.

But there were indications on Sunday that Airbus and Boeing would try to pull off several surprises as they look for bragging rights at the world's largest air show.

Bloomberg News reported that Ethiopian Airlines might order wide-body Airbus A350 aircraft worth $3 billion at list prices.

Airbus declined to comment. Ethiopian could not be reached.

Demand for long-haul, wide-body models is thin due to long waiting lists and fears of a potential glut later this decade.

But Boeing Commercial Airplanes Chief Executive Kevin McAllister said on Sunday he expected further demand to kick in to replace aircraft retiring in coming years.

Still, this year's event will be dominated by small models.

Leasing companies will be out in force as they try to pick up aircraft at competitive prices, since a multi-year boom of sales for fuel-efficient types is winding down.

Industry sources say leasing companies Air Lease Corp and Chinese lessor ICBC are hunting for deals and may order aircraft including Airbus A320neos. Leasing firm Avolon, another major buyer in past years, is also expected at the show.

Engine makers will also be drumming up new business, with China Eastern expected to tap French-U.S. engine maker CFM International to provide the power for Airbus A320neos already purchased for delivery starting next year.

European airlines group IAG could split an engine order to go with its new A320neo fleet, picking Pratt & Whitney to power Airbus A320neo aircraft for its Vueling subsidiary and CFM to provide engines for British Airways.

None of the companies was available for comment.

Several aerospace firms are meanwhile expected to announce contracts for aftermarket services - a growing area for the industry thanks to powerful new data analytics. (Reporting by Tim Hepher; Editing by Edmund Blair)

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