Airbus Strikes $34 Billion Deal With China Amid Boeing Scandal
In a major blow to rival Boeing, Airbus announced a new $34 billion (30 billion euro) deal with China to deliver 300 new planes to the nation’s commercial aviation industry, per BBC News.
The agreement was completed during Chinese President Xi Jinping’s visit to Paris (part of a wider series of visits across Europe for the Chinese government). The deal stipulates that the Chinese Aviation Supplies Holding Company will purchase 290 Airbus A320 planes and 10 A350 WXB jets, for an estimated price of $34 billion.
The A320 is one of the world’s most popular single-aisle aircraft families, with over 14,600 ordered (per Airbus’ official statement). The A350 WXB, meanwhile, is a large wide-body aircraft suitable for ultra-long haul flights.
Airbus President of Commercial Aircraft Guillaume Faury issued a statement on the deal.
“We are honoured to support the growth of China’s civil aviation with our leading aircraft families – single aisle and widebodies. Our expanding footprint in China demonstrate [sic] our lasting confidence in the Chinese market and our long-term commitment to China and our partners.”
Faury is due to become Airbus’ next CEO in April, meaning this may not be the last major deal China strikes with the French aviation company. It also comes as President Xi has been campaigning across Europe for China’s new “Belt and Road” trade initiative. Italy became the first G7 country to sign a Memorandum of Understanding under Belt and Road with the Chinese government this past Saturday (per Al Jazeera).
China agrees to buy 290 Airbus A320 planes, 10 A350s: French presidency https://t.co/8eZl0MgaAC pic.twitter.com/vXKwcWXMpp
— Reuters (@Reuters) March 25, 2019
The deal comes after China grounded all of Airbus rival Boeing’s new 737 MAX 8 jets in the wake of two devastating crashes. The 737 MAX line was officially launched around five months ago to better compete with Airbus’ A320 family, but the 371 operating aircraft have been temporarily grounded by the company to release a software fix for the system that caused the crashes.
However, Airbus may find it difficult to significantly benefit from Boeing’s struggles since the company’s production line is booked full for years in advance. Per CNN Business, Ellis Taylor, Asia finance editor at aviation intelligence firm FlightGlobal, stated that Airbus lacks the capacity to take on many new orders, and most airlines that have already ordered 737 MAX aircraft will stick with the orders due to the large cost and hassle of canceling the orders and switching companies.
“In most cases, airlines that have ordered the Max will continue to take them, because they have invested in training and infrastructure to support that jet, and it would be costly to switch.”
