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Mon, Jan 17, 2005 - Page 12 News List

Airbus eyes booming market in China

AIRPLANE DEMAND In the next 20 years, the European company estimates it can sell 1,600 planes to the Middle Kingdom -- and it's started to hawk them already


The first Airbus A380 superjumbo passenger jet is towed inside a hangar in Blagnac, near Toulouse, southwestern France on Saturday. French President Jacques Chirac and other European leaders are expected in Toulouse tomorrow for the official presentation.


High-flying European airliner builder Airbus has already logged dozens of orders for its new giant A380 aircraft, but success will not be complete unless it can interest China, one of the world's biggest operators.

With the 2008 Beijing Olympics looming, there is speculation that a Chinese order for the twin-deck four-engine plane, which can carry some 550 passengers, will be announced at the A380's official roll-out tomorrow, Hong Kong-based aviation analyst Peter Negline of bankers JPMorgan said.

Such an announcement had already been expected when French President Jacques Chirac visited China in October, and again when German Chancellor Gerhard Schroeder was in Beijing early last month.

The European group has so far received 139 firm orders for the A380 as well as 10 expressions of intent to purchase.

Airbus, which hopes the A380 will enable it to increase its global lead over US rival Boeing, did well last year on the Chinese front, recording firm orders for 58 of its smaller planes, including three from Hong Kong, and letters of intent for 23 more.

Britain's Sunday Times newspaper said Airbus was close to clinching two key A380 orders from China valued at a total of US$3 billion.

The newspaper quoted industry sources as saying Airbus was in talks with the Chinese government and Hong Kong-listed carrier Cathay Pacific.

The Sunday Times said the Chinese government order, likely to be split between Air China and China Southern, would be for five aircraft and a similar number of options to buy more.

The order of Cathay Pacific, it said, could be the same size, taking the value of the Chinese contracts, including options, to about US$3 billion.

In the next two decades, Airbus sees potential sales to China of its products at some 1,600, while Boeing, which currently has a 62 percent market share, predicts more than 2,000 and the domestic Aviation Industries of China (AVIC) is looking at nearly 1,300.

While the Olympic Games are expected to attract tens of thousands of visitors to Beijing, relaxed restrictions by both China and foreign countries mean that many more Chinese are venturing abroad. All will need airline seats.

However, the number of orders for the A380 from Chinese airlines is not expected to be large.

China is looking for a share in the latest aerospace technology, rather than the delivery of products fully finished.

Rainer Hertrich, the co-chief executive of Airbus' parent company, the European Aeronautic Defence and Space Co, said in Beijing last month he was confident China would place orders for the A380 soon.

He said an undisclosed number of what will be the world's biggest commercial airliner, which has a catalogue price of US$275 million, had been reserved for China.

"The A380 will be rolled out in January and the first flight is scheduled for March. I believe in the end, if the Chinese want to see it flying, honestly the Chinese have to hurry up," Hertrich said.

China's commercial air market is expected to be one of the world's largest in the coming years, with Airbus aiming to raise its share of the Chinese fleet from some 25 percent presently to 50 percent in the near future, Hertrich said.

Airbus would increase its annual subcontracting commitments in China -- largely for aircraft doors, wing sections and landing gear parts -- from the current US$40 million to US$78 million 2007 and US$157 million by 2010.

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