China buys 300 Airbus planes dealing blow to Boeing

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China buys 300 Airbus planes dealing blow to Boeing
China buys 300 Airbus planes dealing blow to Boeing

Airbus SE secured a $35 billion jet deal from China during a state visit by President Xi Jinping to the French capital, dealing a blow to Boeing Co. as it grapples with the grounding of its best-selling jet.

According to a press release from Airbus.com website, Airbus and China Aviation Supplies Holding Company (CAS) signed a General Terms Agreement (GTA) covering the purchase by Chinese airlines of a total of 300 Airbus planes.

The GTA was signed in Paris, France by Guillaume Faury, President of Airbus Commercial Aircraft and future Airbus CEO, and Jia Baojun, Chairman of CAS, in the presence of visiting Chinese President Xi Jinping and French President Emmanuel Macron.

The mammoth order consists of 290 A320-series narrow-body planes and 10 A350 wide-bodies, Toulouse-based Airbus said after the transaction was announced in Paris on Monday. The deal’s value is almost double that touted by French President Emmanuel Macron in January 2018 during a trip to Beijing.

“With 290 #A320 Family and 10 #A350 XWB family aircraft ordered, China and Airbus expand their Partnership in Civil Aviation” tweeted Airbus Press.

The Airbus coup comes while Boeing’s own 737 Max narrow-body — the chief global rival to the A320 — has been idled following two fatal crashes in five months.

The first Boeing aircraft crash was the Indonesia Lion Air Flight JT610 crash in October 2018 and second was the Ethiopian Airlines Flight ET302 this month March 2019.

Earlier this month the FAA released a statement announcing that the Boeing 737 Max aircraft are temporary grounded. The grounding is expected to last weeks until at least this year May 2019.

The U.S. planemaker is also struggling with the fallout from a China-U.S. trade war that’s seen sales to the Asian nation dry up, just as Airbus bolsters its position with an offer to expand production facilities in Tianjin.

Airbus was up 1.9 percent in early session trading. French officials said the deal was worth some 30 billion euros ($34 billion) at catalog prices. Planemakers usually grant significant discounts.

The deal announced in Paris will include both Neo — for new engine option — and so-called classic or CEO versions of the A319, A320 and A321, though the majority will be A320neos and A321neos, according to officials. China typically orders planes in large batches and allocates them to airlines later.

The latest A320neo model has a list price of $110.6 million and the A350-900 sells for $317.4 million before discounts.

Airbus’s incoming chief executive officer, Guillaume Faury, said at the press conference that construction of the A320s will take place both in Tianjin and Europe, adding that the deal is “a sign of the confidence” from China. Macron called the transaction “an excellent signal.”

According to Airbus’ latest China Market Forecast 2018 to 2037, China will need some 7,400 new passenger and freighters aircraft in the next 20 years. It represents more than 19 percent of the world total demand for over 37,400 new aircraft.

By the end of January 2019, the in-service Airbus fleet with Chinese operators totaled some 1,730 aircraft, of which 1,455 are A320 Family, and 17 are A350 XWB Family planes.

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