Airbus Inks 160 Aircraft Deal in China, to Open New Assembly Line
On April 6, Airbus, a European aircraft manufacturer, announced that it had signed an agreement with a Chinese partner to purchase 160 commercial aircraft. As part of the expansion into the country, Airbus will also be opening a second assembly line in Tianjin, a municipality and a coastal metropolis in Northern China.
During French President Emmanuel Macron’s state visit to China, Airbus CEO Guillaume Faury signed an agreement with Tianjin Free Trade Zone Investment Co Ltd and Aviation Industry Corp of China Ltd. The agreement aims to expand the A320 family final assembly capacity by adding a second line at its site in Tianjin. This new line is expected to be operational by the end of 2025 and will help Airbus achieve its goal of producing 75 A320 family aircraft per month globally by 2026.
Airbus has signed an agreement with China Aviation Supplies Holding Co (CAS) for the purchase of 160 commercial aircraft, comprising 150 A320 family aircraft and 10 A350-900 wide-body aircraft. The total value of these orders is estimated to be around $20 billion, as reported by CAS.
According to Airbus, China’s air transport volume is expected to grow at an average annual rate of 5.3% over the next two decades, surpassing the global average of 3.6%. This growth is projected to result in a demand for 8,420 passenger and cargo aircraft in China by 2041, which accounts for more than 20% of the total global demand (approximately 39,500).
According to Jiemian News, Airbus signed a procurement agreement with CAS instead of an airline company because CAS typically coordinates the introduction of new aircraft in China.
In July of last year, Airbus received orders from three state-owned airlines in China for a total of almost 300 A320neo narrow-body aircraft. The basic prices for these orders were approximately $12.213 billion, $12.796 billion, and $12.248 billion respectively. Now, after nearly 10 months have passed, Airbus has secured another order for 160 aircraft in the Chinese market.
Since China eased its epidemic restrictions in January of this year, the international aviation market has experienced a significant recovery. The Civil Aviation Administration of China recently announced at a press conference that 2,021 international passenger flights were operated during the last week of March. As a result, airlines must update and replace their outdated planes and reserve capacity in advance to accommodate more international routes.
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When we reflect on Airbus’ development in China, it is evident that its growth rate has been rapid. In 2005, Airbus proposed to establish the first assembly line outside of Europe in Tianjin. At that time, their market share in China was just under 20%. However, after completing the first assembly line and finding local solutions within a decade, Airbus’ market share in China increased significantly to over 50%, as stated by Faury.