Bloomberg News

Airbus Wins $15 Billion of Single-Aisle Deals as Asia Booms

September 26, 2013

Airbus A320 Aircraft

A logo sits beneath the cockpit windows of an Airbus SAS A320 aircraft prior to the opening of the Paris Air Show in Paris. Photographer: Balint Porneczi/Bloomberg

Airbus SAS booked sales valued at more than $15 billion on a single day from Asia, underscoring the region’s role in driving global demand for commercial jets.

Chinese start-up carriers Qingdao Airlines and Zhejiang Loong Airlines joined BOC Aviation and a Vietnamese operator in committing to take a combined 160 planes, the Toulouse-based planemaker said yesterday. The memorandum of understanding from six-year-old VietJetAir was for as many as 92 A320 aircraft.

Asian growth is lifting orders at Airbus and rival Boeing Co. (BA:US), with China set to supplant the U.S. as the largest market by 2032, Airbus said Sept. 24 in its annual forecast spanning two decades. Airbus yesterday unveiled a lighter version of its A330 wide-body jet aimed particularly at markets such as China, which is already the biggest buyer of the aircraft.

“The Chinese market will be the biggest one in the next 20 years, and we’ll continue to lead there,” Airbus Chief Executive Officer Fabrice Bregier said yesterday in Beijing.

Shares in Airbus-parent European Aeronautic, Defence & Space Co. rose as much as 1.3 percent and were trading 0.27 cents higher at 46.88 euros as of 10:30 a.m. in Paris, valuing the company at 37 billion euros ($50 billion)

Local Assembly

Airbus’s position is underpinned by local assembly of single-aisle planes, according to Bregier. The manufacturer, based in Toulouse in southern France, assembles single-aisle aircraft in China, one of three existing facilities worldwide to piece together airliners, with a fourth under construction in the U.S., where Airbus aims to attract more business.

The deals, once confirmed, will bring Airbus beyond the 1,000 aircraft orders the company has predicted it can garner this year. In the first eight months, Airbus had already secured 942 firm orders, with Lion Air Inc.’s purchase of 234 jets in 2013. The accord with Vietjet includes 42 re-engined A320neos, 14 current-model A320s, six A321, and another 30 purchase rights.

Qingdao Airlines, a newly established private carrier in China, agreed to buy 23 A320s, a mix of five current models and 18 re-engined Neos, in a deal valued at $2.3 billion, based on Airbus list prices. Zhejiang Loong Airlines, recently approved by the regulator, signed an agreement for 11 A320s and nine Neos valued at $1.9 billion. The orders are all subject to government approval.

China Growth

Lessor BOC Aviation, owned by Bank of China, made a $2.6 billion commitment with plans to take 13 A320s and 12 re-engined Neo narrow-bodies, including some larger A321s. Aircraft buyers typically get discounts on official prices.

The growth rate in China will be about 7 percent over the next two decades, representing 10.4. percent of global traffic at that point, according to Airbus. The manufacturer began the year with a target for 800 orders, though after pulling in deals worth almost $70 billion at the biannual Paris air show, it raised the bar in July.

By volume, the A320 single-aisle family pulls in the most business for Airbus, with a backlog of more than 4,000 jets, as does the single-aisle 737 series for Boeing. Airbus is exploring an increase of A320 production from a rate of 42 jets a month to 43 or 44 and will likely go higher toward the end of the decade, Chief Operating Officer John Leahy said Sept. 24.

To contact the reporters on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

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


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