Bloomberg News

Airbus Wins 60-Plane China Order After EU Retreat on CO2 Charges

November 23, 2012

Airbus Wins 60-Plane China Order After EU Retreat on CO2 Charges

Airbus, which has an A320 assembly plant in China, won an order for 60 A320 planes from state-backed China Eastern Airlines Corp. Photographer: Nelson Ching/Bloomberg

Airbus SAS won an order for 60 A320 planes from state-backed China Eastern Airlines Corp. (670), less than two weeks after the European Union backed down in a dispute with the government in Beijing over jetliner-emission levies.

China Eastern received a “substantive” discount to the list price of $5.4 billion for the single-aisle planes, it said in a statement from Shanghai yesterday, adding that Toulouse, France-based Airbus also agreed to take 18 regional jets off its hands.

EU plans to impose carbon dioxide-emission fees on flights in and out of the bloc were suspended on Nov. 12 after countries including China, India and Russia threatened retaliatory steps. Airbus parent European Aeronautic, Defence & Space Co. (EAD) had said the levies might cause China to refuse to take its planes.

“I suspect there’s a message there,” said Sandy Morris, an analyst at Jefferies International in London with a “buy” rating on EADS. “China has been light on A320 orders for a while now and it looks like Airbus held some production slots back until this was resolved. It’s called looking after your customer.”

The A320s, due to arrive from 2014 to 2017, will be used mainly on domestic routes, according to China Eastern, which last year switched an order for 24 Boeing Co. (BA:US) 787s wide-body planes to 45 smaller 737s because of waning long-haul demand.

Regional Deal

The airline will sell eight Bombardier Inc. (BBD/B) CRJ planes and 10 Embraer SA regional jets with a book value of 1.5 billion yuan ($241 million) to Airbus, it said in the statement.

China was pleased with the EU move to suspend the plan for emissions charges, Xia Xinghua, deputy director of its aviation regulator, said Nov. 13. The Asian country’s airline association said in June that carriers would snub a deadline for filing emissions data and that the government would support them.

Three calls to China Eastern’s offices outside regular office hours yesterday went unanswered.

Airbus Chief Executive Officer Fabrice Bregier said in September that China was withholding signature on 35 to 45 wide- body A330 planes because of the emissions dispute. A contract for those aircraft would have given a “bigger signal” regarding current Chinese attitudes, Jefferies’ Morris said.

Airbus, which has an A320 assembly plant in China, won an order for 50 of the planes from the leasing arm of state- controlled Industrial & Commercial Bank of China Ltd. in August.

China and other nations had said the EU should wait for a global emissions program being drawn up by the United Nations’ aviation agency rather than push ahead with a regional plan.

The levies are designed to curb C02 output associated with global warming.

To contact the reporter on this story: Neil Denslow in Hong Kong at ndenslow@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Neil Denslow at ndenslow@bloomberg.net


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