Airbus SE to build new China single-aisle jet factory as Apple pulls back

By Siddharth Philip and Danny Lee

Airbus SE will double production capacity in China of its best-selling single-aisle jet, in a bold bet on future demand for air travel and lucrative aircraft orders in one of the world’s biggest aviation markets.
 

The European planemaker will add a second final assembly line at its existing factory site in Tianjin, under a deal signed by Chief Executive Officer Guillaume Faury in Beijing on Thursday. The move is a confidence boost for Chinese manufacturing as other firms like Apple Inc. rethink production in the nation after enduring three years of Covid Zero and the harsh lockdowns and restrictions that went with it.

The expansion of the Tianjin facility will further Airbus’s plan to produce as many as 75 A320neo family jets a month by 2026. At the plant, which opened in 2008, workers stitch together major sections, such as wings and fuselage assemblies. Airbus and chief rival Boeing Co. have struggled to raise output amid supply-chain constraints as demand for new aircraft has surged coming out of the pandemic.

Airbus has also been working to drum up more sales to China. Bloomberg reported this week that the company was targeting a follow-on order that would include A350 and possibly A330neo wide-body aircraft.

In Beijing, Faury also signed a so-called general terms agreement for aircraft sales, without detailing specifics. Chinese carriers ordered more than 300 narrow-body aircraft from Airbus last year, valued at more than $40 billion before customary discounts. Airlines in China make up about a fifth of Airbus deliveries.

China, with its massive global tourism potential, is only just starting to emerge from a three-year freeze on international travel because of its Covid-19 border shutdowns.

Tensions between Washington and Beijing have also been on the rise, providing Toulouse, France-based Airbus with an opening in an important market while Boeing has been effectively locked out, with no major deals signed in China since 2017.

The largest US exporter is still waiting on airlines there to restart deliveries of its re-engined 737 Max jet. China Eastern Airlines Corp. and China Southern Airlines Co. have said they plan to start accepting more of the model this year. The popular single-aisle jet resumed flying in China in January after almost four years, following two fatal crashes that precipitated a global grounding.

Boeing’s main manufacturing plants are in the US although it does have its own completion and delivery center for the 737 Max in Zhoushan in Zhejiang province, where aircraft are painted and interiors are fitted. The partnership with Commercial Aircraft Corp. of China opened in 2018. At the time, Boeing said Chinese customers accounted for one-third of Max deliveries, underlining the importance of the growing market.

Order Race
 

While Airbus secured substantial orders in China last year, Boeing has picked up momentum elsewhere. It edged out its European rival to win a narrow-body deal with Japan Airlines Co. last month, while scooping up a $37 billion order from Saudi Arabia’s Saudia airline and new carrier Riyadh Air. Airbus and Boeing shared the spoils from Air India Ltd’s mammoth 470-plane order in February.

Large plane orders have become a customary goal of trade visits. Airbus locked in a $35 billion deal for 300 jets during Chinese President Xi Jinping’s visit to Paris in March 2018.