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Singapore - China signed a deal to buy 130 planes from Airbus Group SE worth $17bn, intensifying its competition with Boeing in what’s projected to become the world’s biggest aircraft market.
The agreement for 30 twin-aisle A330 and 100 single-aisle A320 planes was signed Thursday during a Beijing meeting between Chinese Premier Li Keqiang and German Chancellor Angela Merkel. The purchase was among a number of deals signed at the meeting.
Airbus and Boeing are competing to carve up what’s expected to become the world’s largest airplane market within the next 20 years.
China’s economic growth and the emergence of budget airlines are making air travel affordable to more people, prompting carriers such as Air China and China Southern Airlines to expand their fleets.
“Chinese demand for travel is growing and China will need more planes to meet that demand,” said Shukor Yusof, founder of Endau Analytics consultancy in Singapore.
Foreign plants
China has encouraged foreign planemakers to expand their local footprints as its own fledging aerospace industry takes shape.
Airbus assembles A320s, most of which go to the Chinese market, at a factory in Tianjin. The European planemaker said in July it was finalizing an agreement with Chinese authorities to build a completion center for A330 planes.
In July, Airbus won an order for 45 A330s, with options for 30 more. The demand will help the planemaker manage the transition from the existing model to a newer variant and avoid a deeper cut to output.
Airbus announced plans in December to bring monthly production of its current A330 wide-body to six a month by 2016 from 10 as it prepared to introduce the newer A330neo with more-fuel-efficient engines.
Airbus shares rose as much as 2.5% to €61.13 and were up 1.3% at 12:40. The stock has surged 46% this year, valuing the company at €47.7bn.
Boeing won an order last month for 300 jets from Chinese carriers and lessors. The company said at the time it would soon open its first Chinese plant for 737 single-aisle planes.
Chinese airlines will need 6 330 new planes in the next 20 years, worth some $950bn, according to a Boeing forecast.
Booming market
China’s growing demand also is attracting interest from Russia, which plans to work with China on a wide-body plane that would compete with Boeing and Airbus jets.
Russia’s United Aircraft and Commercial Aircraft of China, known as Comac, are discussing a work plan building on a memorandum of understanding signed in May 2014, Russian Deputy Industry Minister Andrey Boginsky said earlier this year.
China will become the world’s biggest air travel market by 2034, with one in five passengers traveling to, from or within the country, the International Air Transport Association said in April. About 70 000 flights - some 10% of the world’s total - operate to, from, or within mainland China every week, or according to IATA.
By 2020, there will be 13 Chinese airlines with more than 100 planes in their fleets, up from six carriers as of November 2014, the CAPA Centre for Aviation said last year. China Southern is Asia’s biggest carrier by fleet size with over 400 planes, which moved more than 100 million passengers last year.
