Tue, Dec 07, 2004 - Page 11 News List

China buys 23 jets from Airbus

BIG BUSINESS China signed a variety of contracts with German companies yesterday, and apart from the planes, will buy locomotives and transform high-tension electricity

AGENCIES , BEIJING

China signed a contract yesterday to buy 23 commercial jets from aircraft manufacturer Airbus in a deal worth close to US$1.34 billion.

"This is a firm order. This is new," said Dietmar Staffett, a German government official accompan-ying Chancellor Gerhard Schroeder on an official visit to China.

"There are 23 planes, they are all from the A319, A320 and A321 family. The deal is worth a little less than a billion euros," he said.

The contract was signed between the European aircraft-maker and the China Aviation Supply Corp, a trading company under the Civil Aviation Administration of China.

It was not clear which airline would be using the planes.

However, no deals were signed for Airbus' future A380 superjumbo, the sale of which are seen as paramount to the company's China plans.

German government sources said talks over the purchase of the A380 have not been completed and are unlikely to finish before year-end.

Many had expected an A380 deal to be inked during the visit to China by French President Jacques Chirac in October or at the Zhuhai international airshow in the southern province of Guangdong last month.

The Wall Street Journal said last week that Beijing was holding up the deal because of the EU's refusal to lift the 15-year-old ban on arms sales to China. This was most strenuously denied by Vice Foreign Minister Zhang Yesui (張業遂).

Yesterday's deal was the third contract for Airbus in China this year.

In June, the European aircraft-maker signed a US$2 billion contract with China Eastern Airlines for 20 A330-300 long-range planes.

This was followed in October when flagship carrier Air China ordered six medium-range A319 airplanes.

It has been forecast that China will become the world's second largest commercial aviation market after the US, flying a 2,800-strong fleet of planes, within 20 years.

To get there, China's airlines will require nearly 2,300 new airplanes by 2023 and will spend some US$183 billion to quadruple their fleets, rival aircraft-maker Boeing said at the recent Zhuhai international airshow in southern China.

catching up

Airbus has sold more than 200 planes in China since the mid-1980s, rapidly catching up with rival Boeing over the past five years, but still lagging behind in terms of total planes in use.

Schroeder is accompanied by a large delegation from German companies including Deutsche Bank, engineering group Siemens AG and insurance giant Allianz, and the Airbus deal was just one of 22 agreements signed between Germany and China yesterday.

Siemens yesterday signed a US$483.8 million deal to sell a Chinese firm 180 locomotives, and inked another agreement with China Southern Grid worth 210 million euro on high-tension electricity transformation.

China's fixed exchange rate, blamed in Europe and the US for yawning trade imbalances, had been expected to be on the agenda but was not discussed when Schroed-er dined with Premier Wen Jiabao (溫家寶), German government sources said.

He meets President Hu Jintao (胡錦濤) today and later will travel to the northeastern city of Chang-chun to open a Volkswagen AG plant before flying to Tokyo later tomorrow.

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