Airbus deepens ties with China, no plane deals announced yet
During the visit of the French government to China on January 8-10, Airbus took the opportunity to strengthen its industrial ties by agreeing to upsize the production rate in Tianjin. The French manufacturer in turn was expected to sell hundreds of planes, most notably the A380, but so far the anticipated order is nowhere in sight.
On January 9, 2018, Airbus signed a Memorandum of Understanding (MoU) with the National Development and Reform Commission of China to “enhance their industrial partnership in Tianjin and strengthen the cooperation with regards to technical innovation, engineering capabilities and supply chain expansion”, the company announced in a statement. The visiting French President Emmanuel Macron and Chinese President Xi Jinping participated in the signing of MoU.
“The industrial cooperation between Airbus and China and its continued success are a true role model of a winning partnership between China and Europe. Together with our Chinese partners we are proud to lift our cooperation to new heights,” said Fabrice Brégier, Airbus COO and President of Commercial Aircraft.
Airbus’ industrial footprint in China dates back to 1985, when the first product subcontracting agreement was signed with Xi’an Aircraft Company. The total value of industrial cooperation between Airbus and the Chinese aviation industry in 2017 amounts to nearly 600 million dollars.
Doubling the production rate of A320 in Tianjin
Airbus is deepening its ties with China and has agreed to increase its A320 production rate at its Final Assembly Line in Tianjin to six aircraft per month, the company announced on January 9, 2018. In a statement the company said the industrial ramp-up targets five aircraft per month by early 2019 and six per month by early 2020. This is nearly the double of current rate. Since its inauguration in 2008, the Final Assembly Line in Tianjin has assembled a total of 354 A320 Family aircraft, making the current production rate approximately 3 aircraft per month.
Make in China, sell in China?
Prior the French visit in China, Airbus was expected to sign a deal of increasing production in China in exchange to massive aircraft orders, as Boeing did in November 2017. During the United States trade mission to China, the US plane maker announced orders and commitments for 300 Boeing single-aisle and twin-aisle airplanes, worth over $37 billion at list prices. No plane sales have been officially announced in Airbus’ case yet.
On January 10, 2017 French President Emmanuel Macron said Airbus did actually land an order for 184 A320s and the deal is to be finalized soon, Reuters reported. If carried through, the $18 billion worth (in list prices) deal would exceed the expectations as it was previously reported Airbus was hoping to sell around 100 aircraft.
A trickier situation is with the deal of Airbus’ wide-body jets (A350 and A380) that Macron still expects to be made in the near future. On January 8, 2018 the Financial Times reported that Airbus was ready to offer the Chinese a production role (in particular, finishing and interiors) of A380, if only they ordered it.
Airbus troubles with selling A380 made headlines during Dubai Air Show in November 2017, when Emirates backed out from a predicted $16-billion-worth deal and chose Boeing Dreamliners instead. Additionally, during an interview on November 17, 2017 Airbus CEO Tom Enders admitted that the market for the A380 is very narrow and the continuing of A380 for the next decade depends on new deals by referring to the talks with Emirates for 30-40 aircraft that were ongoing at that time.