the latest on China and the A-320 assembly. Looked like that assembly line cost 300 orders.
Oct. 26 (Bloomberg) -- Airbus SAS, trailing Boeing Co. in new
business this year, won an order from Chinese airlines for 150 A320
planes and agreed to set up a factory in Tianjin to win a greater
share of sales in the world's second-largest aviation market.
The factory in eastern China, Airbus's first final assembly
plant outside of Europe, will eventually produce as many as four of
the A320 planes a month, said Chief Executive Officer Louis
Gallois. The plane order is worth $10 billion at list prices.
``It's a very good step of cooperation between China and the
European industries,'' Gallois said at a press conference today in
Beijing. ``There will be more of these steps.'' Gallois is one of
more than two dozen chief executives accompanying French President
Jacques Chirac on a state visit to China.
Airbus has been rocked by delays in the 555-seat A380 model
and the success of Boeing's long-range 787 Dreamliner. The A380s
are now about two years behind schedule and cost overruns will
reduce parent company European Aeronautic, Defence & Space Co.'s
profit by 4.8 billion euros ($6.1 billion) through 2010.
``Airbus was way behind Boeing and this allows them to catch
up part of the way,'' said Pierre Boucheny, an analyst at Kepler
Equities in Paris who has a ``reduce'' rating on EADS. ``The
assembly line in China is a good thing for Airbus and the Chinese
are paying for it with orders.''
Shares of EADS rose as much as 97 cents, or 4.7 percent, to
21.79 euros and were up 3.9 percent at 2:37 p.m. in Paris. The
stock is down 32 percent this year compared with a 15 percent gain
for Chicago-based Boeing.
Skybus Order
Airbus today also won an order for 65 of the single-aisle A319
planes from Skybus, a new low-fare airline based in Columbus, Ohio.
At list price, the purchase would be worth $4.3 billion. Airlines
generally get substantial discounts for large orders. In standard
configuration, the A319s seat 124 passengers while A320s take 150.
The U.S. planemaker has been leading Toulouse, France-based
Airbus in orders this year by a margin of more than 3 to 1. Boosted
by demand for the 787, Boeing had orders for 753 planes through
Oct. 17 compared with 226 for Airbus through September, according
to figures on their Web sites. Airbus maintained its lead in
deliveries by 320 to 295 through September.
China has been one of Airbus's bright spots over the last five
years. According to the Ascend database of Airclaims, a London-
based consulting company, Airbus won orders for 333 planes compared
with 303 for Boeing between Jan. 1, 2001, and Sept. 14. Because the
U.S. company began selling planes in China years before Airbus, 63
percent of the 994 Western-built large commercial aircraft operated
in China as of Sept. 14 were Boeings, according to the database.
China Orders
The latest order for 150 of the single-aisle A320s comes on
top of a similar 150-plane purchase agreed upon in December, said
Airbus's China President Laurence Barron. The first of the 150
planes ordered today will be delivered in 2009, he said. The
Tianjin factory will begin operating in 2009 and get up to capacity
of four planes a month by 2011, Airbus said.
``The Tianjin plant will not have enough capacity to fill the
entire order by China so some of those planes will have to come
from elsewhere,'' Barron said.
China also signed a letter of intent to buy 20 Airbus A350
aircraft, which Airbus is redesigning to compete with Boeing's 787
model. The A350 carries a list price of between $158.6 million and
$182.6 million. Coupled with the A320 order, today's transaction is
the largest ever for Airbus in China, the company said today in a
faxed statement.
China ordered 150 Boeing 737s in two separate contracts from
November 2005. The Boeing 737 competes with the Airbus A320.
Economic Growth
Economic growth is spurring travel demand in China, the
second-largest air travel market after the U.S. Passenger numbers
will probably rise 17 percent in 2006, from 138.3 million last
year, the aviation regulator said on Sept. 12.
Travel demand in the country may grow at an annual rate of 8.7
percent until 2016, the London-based World Travel & Tourism Council
said in March.
The country's airlines are struggling to turn this rising
traffic into profit, as government restriction on ticket prices
have prevented them from raising fares enough to cover higher jet
fuel prices. Airlines in China lost 2.57 billion yuan ($325
million) in the first half, according to the country's aviation
regulator.
Chinese airlines are among the world biggest buyers of single-
aisle aircraft, which carry about 150 passengers and are used
mainly on domestic routes of up to 3,000 nautical miles (5,556
kilometers).
The country is also spending a total of 140 billion yuan on
airports, as it seeks to develop flights to regional centers. The
country is expanding half of its 142 existing airports and plans to
build another 49 by 2010, the aviation regulator said on Sept. 12.
The number of airports will rise to 224 by 2020.
China orders aircraft centrally through the China Aviation
Supplies Import and Export Group, and then allocates them to
individual airlines.