Airbus Said to Be Nearing Chinese Order Exceeding 100 Jets
Airbus SAS is close to winning an order from China for more than 100 narrow-body planes in what would be the European manufacturer’s single biggest agreement this year, three people familiar with the negotiations said.
Chief Executive Officer Fabrice Bregier will head to China this week to join Tom Enders, the CEO of Airbus parent European Aeronautic, Defence & Space Co. Enders is traveling with German Chancellor Angela Merkel on a state visit to China, where Airbus assembles narrow-body jets for the local market.
A purchase exceeding 100 planes would help the Toulouse, France-based company narrow the gap in orders this year with Boeing Co. (BA), which dominated the Farnborough Air Show last month with its 737 Max airliner. Airbus has said that its intake would slow this year after customers rushed to buy its A320neo in 2011, a more fuel-efficient version of Airbus’s bestseller.
The agreement is still being negotiated, said the people, who declined to be named because the discussions are private. Eduardo Galicia, a spokesman for Airbus, declined to comment. Two calls after office hours to the Civil Aviation Administration of China, or CAAC, which approves most aircraft orders in China, went unanswered.
The A320 has a list price of about $88.8 million, though airlines typically buy at a discount. Airbus had secured orders for 301 passenger jets through the end of July, less than half of Boeing’s tally and leaving the European planemaker at the mid-point of its minimum 2012 target of 600 units.
Contract signatures by CAAC are the last step for Chinese airlines to secure orders. Airlines frequently negotiate with plane manufacturers and agree on purchases, only to then wait for approval from the government body.
Airbus is in the process of evaluating the future of its assembly facility in Tianjin, China. The company owns 51 percent of the venture and China’s Avic owns the rest. The facility began delivering A320 jets in 2009, and the 100th plane will roll off the line at the end of this week.
The Chinese team wants to build 284 single-aisle jets by June 2016. The facility is churning out more than three planes a month, with the rate of four monthly to come by year-end.
The Tianjin plant will deliver the last planes in the same year that state-controlled Commercial Aircraft Corp. of China Ltd. aims to have a rival plane with 168 seats in service, aimed initially at the domestic market. Airbus also intends to start delivering its A320neo with new engines from late 2015.
A large Chinese government order for Airbus A320s would be the first since the country joined India and the U.S. in protesting European Union plans to include airlines in its carbon market from this year.
China has already backed off signing for at least 35 Airbus wide-body planes. Single-aisle planes, which range from the 124- seat A319 to the 185-seat A321, aren’t part of the dispute as they are shorter range and wouldn’t link China with Europe.
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