BEIJING (Reuters) - Airbus EAD.PA has landed deals with Chinese companies for almost 70 aircraft worth around $6 billion, as it increases its footprint in what it expects to become the largest domestic aviation market.
The European planemaker, which is battling Boeing Co (BA.N) in a market it sees surpassing the United States by passenger numbers within 20 years, has also unveiled a “regional” jet aimed at China. Domestic travel grew almost 10 percent last year in China, compared with less than 1 percent in the U.S., according to the International Air Transport Association.
Airbus, like Boeing, has been working to increase its chances of winning orders by building a visible presence in China. It sources parts from state-owned aviation companies, and assembles four single-aisle, short-range A320 aircraft a month in Tianjin.
Airbus, a subsidiary of EADS, has reached an in-principle agreement to extend the A320 assembly line beyond 2016, after eventually switch it to the A320neo which runs on a new engine, President and Chief Executive Fabrice Bergier told Reuters at the Aviation Expo China 2013 in Beijing on Wednesday.
Demand for A320-family aircraft is buoyant, with around 100 A320neo orders from mainland China, Airbus said last week.
At the exhibition, Airbus announced an order for 13 A320 and 12 A320neo from BOC Aviation, the Singapore-based aircraft-leasing arm of Bank of China (3988.HK) (601988.SS) which in December ordered 50 A320-family aircraft.
Airbus also said it has signed deals with fledgling carriers Zhejiang Loong Airlines and Qingdao Airlines for 20 and 23 A320-family aircraft respectively, including both the A320 and A320neo. Zhejiang Loong Airlines expects to begin operations this year and Qingdao Airlines expects to begin operations next year. Both deals require government approval before Airbus can add them to its backlog of over 5,000.
The list price of an A320 is $91.5 million and that of an A320neo is $100.2 million, meaning the three deals could bag over $6 billion before industry-common discounts.
Airbus is not just focusing on its smallest aircraft. It has modified its twin-aisle, long-haul A330-300 to make it optimal for shorter routes. The “regional” A330-300’s operational weight is 200 tonnes less and yet can seat 30 percent more passengers on flights of up to 3,000 nautical miles, or half the long-haul range. It can also offer around 15 percent in savings from lower fuel burn and maintenance costs, Airbus said at the exhibition.
Airbus expects to sign up its first customer by early 2014, and hopes to sell “hundreds” over the next 10 years, said Bregier. It designed the new A330-300 to meet demand in high-density, short-haul markets such as Southeast Asia, India, the Middle East and China in particular, he said.
“We are announcing the A330-300 lower weight variant today in China because here we see strong pent-up demand for efficient and reliable wide-body aircraft connecting mega cities such as Beijing, Shanghai, Chengdu and Guangzhou,” Bregier said.
There could be as many as 185 A330-300s in China by 2015, based on existing fleet numbers and orders. The new variant could double that figure, said Airbus China President Eric Chen at the exhibition.
Reporting by Fang Yan and Jonathan Standing; Editing by Christopher Cushing