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Fri, Oct 27, 2006 - Page 10 News List

Airbus to set up plant in China

ASSEMBLY PLANT The deal, involving the sale of 150 aircraft and construction of a plant in Tianjin, will give the French firm a solid foothold in a fast developing market

AFP , BEIJING

French President Jacques Chirac, left, and Chinese President Hu Jintao, hold a joint briefing after a signing ceremony in Beijing's Great Hall of the People yesterday.

PHOTO: AP

Airbus yesterday won a Chinese order of 150 A320 aircraft and agreed to set up a plant in China in a deal seen as giving the European giant a launchpad into the world's most lucrative aviation market.

The multi-billion-dollar arrangement, one of 13 deals signed during a visit by French President Jacques Chirac to Beijing, was accompanied by an option for China to buy 20 of Airbus' new wide-body A350 planes.

The Airbus A320 assembly plant, to be located in Tianjin not far from Beijing, will complete its first aircraft in 2009 and will subsequently manufacture four a month, the aircraft maker said.

"It's a means for us to develop a long-term vision with the Chinese," Louis Gallois, the chief executive of the European aerospace giant, told reporters.

"It's clear that building the planes in China will give the Chinese an incentive to buy more of our aircraft," he said.

No figures were immediately available about the value of the 150-plane deal although estimates based on the list price of the aircraft were as high as US$10 billion.

It follows China's order last year of another 150 Airbus planes, also with a list price of nearly US$10 billion, which was signed when Chinese Premier Wen Jiabao (溫家寶) visited France.

Airbus has previously published estimates that potential sales among all airlines in China over the next 20 years will total around 1,600 planes.

The European company is seeking to undercut US rival Boeing which has about two-thirds of the lucrative Chinese civil aviation sector and says it is aiming for a 50 percent market share.

Analysts said yesterday's developments could be significant in helping Airbus achieve its goal.

Ian Thomas, a consultant at the Center for Asia Pacific Aviation in Australia, said the Airbus deal "reflects the increasing growth and focus of the China domestic market.

"It also reflects the development of more short-haul services within that market. The A320 is specifically geared towards that area," he said.

The A320, a medium-range, single-aisle twin-engine jet capable of carrying up to about 180 passengers, remains the European company's most popular aircraft after 17 years on the market.

It is in direct competition with Boeing's 737 model and targets the same fast-growing segment of Chinese aviation.

In June, China's National Development and Reform Commission, the national planning agency, approved the plans for a plant in Tianjin, calling the move an important step for the nation's aviation industry.

China has repeatedly stated its ambition of building large passenger jets by 2020 although it is still struggling to develop a market for domestically built jets of 70 to 90 seats.

Airbus will hold a 51 percent stake in the Tianjin facility, according to sources close to the negotiations between Airbus and China.

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