Airbus sells 292 A320s to four Chinese airlines, hitting Boeing as tensions between US and China teeter in favor of European manufacturer

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Airbus has received a massive order for 292 A320 narrow-body aircraft from four Chinese airlines as deteriorating US-China relations tipped the plane’s sales balance in favor of the European manufacturer, hurting US rival Boeing.

China Southern Airlines, Air China, China Eastern Airlines and Shenzhen Airlines are the four carriers buying the aircraft, Xinhua news agency reported. Details on how the bulk order would be distributed and the price paid for each aircraft were not immediately available.

The bulk order came close to China Southern making the decision in May to drop more than 100 Boeing 737 MAX aircraft — a direct competitor to the A320 — from its fleet plan as the national flag carrier cited “delivery uncertainties.”

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The Guangzhou-based airline, which was the first in 2019 to suspend 737 MAX flights following two consecutive fatal crashes in five months by other carriers in Indonesia and Ethiopia, will cut Boeing deliveries to 78 aircraft through 2024 from 181 during the March forecast.

An A320 aircraft in the final assembly shop at Airbus’ Tianjin facilities, March 1, 2016. Photo: EPA

The A320, a narrow-body jet capable of carrying between 150 and 180 passengers depending on configuration, is valued at $101 million each. Bulk purchases are eligible for large discounts over list prices, and an airline industry rule of thumb divides the total list price in half to estimate order value.

As of the end of May, there were 2,070 Airbus aircraft in the combined fleet of China’s state-owned airlines, according to China’s civil aviation regulator.

The decision to add more Airbus aircraft instead of Boeing tilts one of the most lucrative big deals in global trade in favor of Europe, taking it off the negotiating table as the US and China remain mired in trade disputes left over from the Trump era. U.S.-China relations are at their lowest point in more than four decades as disputes rage on a range of issues, from a trade war to tensions over the Taiwan Strait and the South China Sea.

An Airbus A320-200 with China Eastern Airlines livery approaches Chiang Mai Airport from Shanghai, October 12, 2016. Photo: Shutterstock alt=An Airbus A320-200 with China Eastern Airlines livery comes in to land at Chiang Mai Shanghai airport, October 12, 2016. Photo: Shutterstock>

“As a leading U.S. exporter with a 50-year relationship with China’s aviation industry, we are disappointed that geopolitical divisions continue to hold back U.S. aircraft exports,” a Boeing spokesman said in a statement Friday, Bloomberg reported.

The aircraft manufacturer continued to call for productive dialogue between the US and Chinese governments, according to a Reuters report.

The choice of China Eastern may be more immediate. The Shanghai carrier is still investigating the cause of the fatal crash of Flight MU5735, an older workhorse Boeing 737-800, that killed all passengers and crew on board when it crashed into the mountains of the Guangxi region in March.

An Airbus A320neo passenger aircraft before a test flight on July 1, 2014 at the Airbus plant in Saint-Martin-du-Tache, near Toulouse, in southern France. Photo: Agence France-Presse. alt=An Airbus A320neo passenger aircraft before a test flight on July 1, 2014 at the Airbus plant in Saint-Martin-du-Touche, near Toulouse, in southern France. Photo: Agence France-Presse.>

The large order showed how China – the world’s second largest aviation market after the US – is showing “momentum” in its recovery from the downturn caused by the Covid-19 pandemic, Airbus said.

China is the fastest-growing aviation market for both Airbus and Boeing, where both manufacturers have opened finishing assemblies – Airbus in Tianjin, Boeing in Zhoushan – to assemble aircraft closer to their customers.

They also have to compete with China’s ambitions for global aviation market share with the locally assembled Comac C919 aircraft, which made its first pre-sale test flight in May.

“These new orders demonstrate the strong trust in Airbus from our customers,” Airbus Chief Commercial Officer Christian Scherer said in a press release.

There are early signs that China’s strict control over international flight arrivals over the past two years, as part of Beijing’s attempt to contain the Covid pandemic, is slowly easing due to the associated economic cost. The country’s largest airlines, such as Beijing-based Air China and Shanghai-based China Eastern, suffered losses for two consecutive years by the end of 2021.

Dozens of landing Boeing 737 MAX aircraft parked at Grant County International Airport in Moses Lake, Washington, USA, November 17, 2020. Photo: Reuters. alt=Dozens of landing Boeing 737 MAX aircraft are parked at Grant County International Airport in Moses Lake, Washington, USA on November 17, 2020. Photo: Reuters.>

According to media reports in June, the Civil Aviation Authority of China (CAAC) is in talks with its counterparts in Vietnam and Thailand to allow their respective airlines to increase passenger flights from one to two per week.

The CAAC said it is in talks with selected countries to gradually and steadily increase scheduled international passenger flights, which will contribute to the sustainable development of the industry, according to a report. Global Timesreferring to CAAC spokesman Liang Nan during a media briefing last month.

Overall demand for global air travel in April, measured in revenue passenger-kilometers (RPK), rose 78.7% from the same month last year as the recovery in air travel continued after more countries lifted border restrictions related to Covid, according to the data. according to the International Air Transport Association (IATA).

The rise contrasted with China, however, as continued tight restrictions with its nearly two-month lockdown of Shanghai since April to contain the omicron variant saw its domestic traffic drop 80.8% year-on-year, according to IATA data.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia in over a century. To learn more about SCMP, check out the SCMP app or visit the SCMP Facebook page and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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