Bloomberg News

Airbus Weighs Chinese A320 Future as Competition Gains

June 13, 2012

(Corrects date of first aircraft delivery in second paragraph.)

Airbus SAS is evaluating the future of its assembly facility for single-aisle aircraft in China, as the country works on its own design of a competing airliner.

Airbus owns 51 percent of a venture that began delivering A320 jets in 2009, while China’s Avic owns the rest. The team wants to build 284 single-aisle jets by June 2016. The facility is churning out more than three planes a month, with the 100th just beginning assembly. The rate will reach four monthly by year-end, Airbus China President Laurence Barron said.

The Tianjin plant will deliver the last planes in the same year that state-controlled Commercial Aircraft Corp. of China Ltd. aims to have a rival plane with 168 seats in service, aimed initially at the domestic market. Airbus also intends to start delivering its A320neo with new engines from late 2015.

“If we extend the final assembly line, then automatically the Neo comes into the picture,” Barron said in an interview at the facility, located 100 miles outside Beijing.

Mainland China will need 3,832 new passenger planes over the next 20 years, including 2,520 single-aisle aircraft, with the total worth $509 billion, according to Airbus. In 2011, China was already No. 2 in deliveries worldwide after the U.S

Airbus has 800 planes in service in China today, 670 of which are A320 series planes. The manufacturer entered the market in 1994, two decades after Boeing Co. (BA:US), and today the two have about an equal shares in that country.

Neo Negotiations

The Tianjin plant assembles only A320s, which seat 150 people, and A319s, seating 125. All planes coming off the line go to Chinese airlines or lessors, though comprising just a fourth of all single-aisle production going into China.

Most of Airbus’s single-aisle planes are built in Hamburg, Germany, and Toulouse, France, where Airbus’s wide-body A330 and jumbo A380 are also put together.

No Chinese airline has yet ordered any of Airbus’s A320neos. The planemaker is negotiating with the Chinese government for the sale of at least 100 single-aisle planes, Airbus Chief Operating Officer John Leahy said this week. Negotiations may be completed this year.

Barron gave no timetable for an agreement on the Tianjin plant and declined to provide any information on issues involved. Should the two sides not extend the agreement, Airbus could recuperate tools and jigs used to make the planes.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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