Airbus signs deal for second China plant

Jul 02, 2015, 3:02 PM EDT
The logo of European aerospace giant Airbus is pictured on a wall during the company's annual press conference in Munich, southern Germany, on February 27, 2015.

On Thursday Airbus signed a deal to build a second plant in China to manufacture airplane cabins. The 150-million-euro plant will be placed alongside an existing assembly line for smaller A320 jetliners in the northern port city of Tianjin from late 2017, reports Reuters. It will be responsible for completing cabin work on large A330 jetliners. The contract was signed during a visit by Chinese Prime Minster Li Keqiang to the planemaker's headquarters in Toulouse, along with two other deals on the production of cabin equipment and fasteners for assembling plane parts.

It came 48 hours after China agreed to buy 45 similar jets worth over $11 billion, with plans for a possible further 30, and could lead to further orders in the future. Despite a slowdown in its economy, China is the world's fastest-growing aviation market, with a surge in outbound travelers fuelling the expansion. It is projected to order a total of 5,300 jetliners over the next 20 years. Airbus hopes the increased presence in China will lead to more demand for its profitable but aging wide-body A330, which is due to be revamped with new engines soon to boost sales.

Airbus opened its first non-European aircraft assembly plant in Tianjin in 2009 and extended the co-operation venture with Chinese interests to 2025, in a fresh agreement last year. It also plans to inaugurate another non-European assembly plant for A320 jets in Mobile, Alabama, in September. Negotiations to set up the new wide-body cabin completion center at Tianjin took longer than expected, partly due to a trade row between China and the European Union over airline emissions that was settled last year.

At present, the in-service Airbus fleet with Chinese operators comprises over 1,150 aircraft (over 150 A330 Family and over 980 A320 Family aircraft), Airbus wrote in a press release. In the 20 year period between 2014 to 2033 Airbus forecasts a demand in China for more than 5,300 new commercial aircraft over 100 seats plus freighters.