UPDATE 1-Airbus in talks on sales of A350 freighter -exec

(New throughout, adds details and further comments)

By Tim Hepher

TOULOUSE, France, Sept 21 (Reuters) - Airbus is in
talks with several potential customers for a new A350 freighter
while seeing signs of demand for smaller A320 passenger jets in
Europe, its sales chief said on Tuesday.

With e-commerce booming, Airbus formally began marketing a
proposed freight variant of its A350 passenger jet in July,
taking aim at Boeing’s tight grip on the global cargo market.

“We are in a number of very encouraging discussions,” Chief
Commercial Officer Christian Scherer told reporters in Toulouse,
where the European planemaker is based.

“It is available for sale and is selling,” he added.

Boeing has for years dominated the market for purpose-built
freighters, even as its European rival grabbed the crown as the
world's largest maker of passenger jets.

Boeing is preparing to launch its own new freighter, a cargo
version of its upcoming 777X jetliner, industry sources say.

Freighters can sell for higher prices than passenger planes
and help to prop up depressed production for wide-body models at
a time when long-haul travel is weak, industry experts say.

While demand for wide-body passenger jets remains stagnant,
demand for smaller planes used in regional and domestic markets
is rising.

"Demand is coming back," Scherer said. "We need to be very
careful - we are not out of the woods and we are still in a very
fragile environment - but Europe is rallying quite nicely at
this moment."

Airbus plans to increase production of the medium-haul
A320neo family, which competes with Boeing's 737 MAX, to a
record 63 a month from 40 now, surpassing pre-crisis levels.

It has said it is also looking at pushing output as high as
75 a month, but such levels have drawn concerns about supply
chains from engine makers like France's Safran.

Scherer defended the existing production commitments, which
he said were justified by contracts with airlines even after an
industry shakeout brought about by the coronavirusus crisis.

"If anything in my world I am challenging them to be
steeper," he said.

Airbus is talking to Hungary's Wizz Air over a sale
of at least 100 more narrowbody jets, Reuters reported earlier
this month.

Among other European prospects, British Airways parent IAG
has reopened a fresh competition between Airbus and
Boeing for narrowbody jets, revisiting a large provisional order
for 200 MAX jets that was never finalised, the sources said.

Finnair is looking at a narrowbody purchase but a formal
tender has yet to be launched.

Air France-KLM in July said it had launched a
tender to extend the medium-haul fleets of Dutch unit KLM and
the French and Dutch arms of low-cost subsidiary Transavia.
(Reporting By Tim Hepher in Toulouse; Editing by David
Gregorio)