Airbus secures mega-order from four Chinese airlines

Four Chinese airlines have placed a mega-order for 292 single-aisle A320 family aircraft from airbus. 

The deal, for Air China, China Eastern, China Southern and Shenzhen Airlines, total nearly $37 billion (€35.4 billion) at the rarely applied list price.

Despite air traffic being paralysed in China by the pandemic, the need for aircraft remains immense.

For Airbus, these orders, which have yet to be finalised, “demonstrate the positive recovery momentum and prosperous prospects of the Chinese aviation market.

China Eastern will acquire 100 A320neo Family aircraft, while China Southern will acquire 96 of the same model. Air China and its subsidiary Shenzhen Airlines will acquire 64 and 32 A320neo aircraft respectively.

The airlines did not specify the A320 family models involved, but according to a source close to the matter, these include both A320s and A321s capable of carrying more passengers, as well as some smaller A319s.

All deliveries are scheduled to take place between 2023 and 2027, suggesting that the contract was negotiated long ago as available delivery slots become scarce for Airbus, which is faced with high demand for its single-aisle aircraft.

Although weakened by the pandemic, airlines around the world are seeking to prepare for global traffic growth, which is expected to double in the next 20 years compared to 2019. To do this, they are preparing to replace their fleets with more modern aircraft that consume less fuel and therefore emit less CO2.

And while air traffic in China remains atrophied by the country’s severe health restrictions, it is expected to explode in the coming years. The fleet of aircraft in service in China is expected to triple by 2040 to nearly 11,000 aircraft, according to Airbus forecasts.

At the end of May, the European aircraft manufacturer’s order book totaled more than 8,000 orders for A320 family aircraft.

Increase in production rates

When asked a few months ago about the absence of Chinese orders for several years despite the prospects for long-term growth, Airbus executive chairman Guillaume Faury expressed his confidence.

“There will be a need to renew this order book so that the airlines can regain visibility,” he said in front of a few journalists.

This mega-order also reinforces the European aircraft manufacturer’s ambition to increase its production rate to 75 A320 aircraft per month by 2025, according to a source close to the matter.

Some suppliers, including engine manufacturer Safran, have expressed doubts about the appropriateness of such rates, because of the investment that this would entail and the expected need in the long term.

Airbus had drastically reduced its production during the pandemic and has begun a gradual increase in output, with 45 A320 Family aircraft per month by the end of 2021. It expects to produce 65 per month by the summer of 2023 despite tensions in recent months over supplies and occasional difficulties in hiring.

The order comes as China has yet to certify the C919 jet from its national aircraft manufacturer Comac, which is intended to compete with the Airbus 320 and Boeing 737 MAX. According to Comac, 815 of the aircraft have been ordered by Chinese companies.

Announced a few days before the Farnborough International Airshow in England, a traditional opportunity for aircraft manufacturers to announce this type of order, it is also a setback for Boeing and its 737 MAX, which was deemed fit to fly again by Beijing in December.

The American aircraft manufacturer is counting on the huge Chinese domestic market to regain its colours with its single-aisle competitor to the A320. The four companies that announced the Airbus order on Friday are already MAX customers.