Airbus to double capacity of China jet factory

Created on 12.04.2023 17:21

Airbus SE is to double production capacity in China of its top-selling jet in a bold bet on future demand in one of the world’s biggest aviation markets.

The European planemaker is to add a second final assembly line for A320 narrow-bodies at its factory in Tianjin, under a deal signed by CEO Guillaume Faury in Beijing on Thursday. The move is a boost for Chinese manufacturing as other firms like Apple Inc rethink production in the nation amid rising tensions with the US.

The expansion of the Tianjin facility would be an “important part” of Airbus’ plan to produce as many as 75 A320neo family jets a month by 2026, Faury said on a call with reporters from Beijing.

At the plant, which opened in 2008, workers stitch together major sections, such as wings and fuselage assemblies, giving the aircraft its final shape.

Airbus and chief rival Boeing Co have struggled to raise output amid supply-chain constraints, as demand for passenger planes has surged coming out of the COVID-19 pandemic.

“We’re paving the way for the growth of the market here in China,” Faury said.

Faury was part of a delegation of dozens of French business executives traveling with French President Emmanuel Macron, many of whom were returning to China for the first time since the pandemic.

However, Airbus looked set to leave China without a new plane order during Macron’s three-day state visit, despite intensive talks over the past weekend with Chinese customers.

Bloomberg reported this week that the company was targeting a follow-on order that would include A350 and possibly A330neo wide-body aircraft.

Faury said Airbus remained optimistic about winning more business in China, where it holds a sizable advantage over Boeing Co.

“We are all discussing with our customers and looking at the future,” Faury said. “Orders, if any — and there will be some I’m sure — will come at a later stage.”

The extra line in Tianjin would bring Chinese production capacity into proportion with its share of global demand, Faury said.

It is to come into service in the second half of 2025, he said.

Airbus now builds four A320s a month in Tianjin, and Faury said it plans to raise monthly output to six later this year, restoring a pre-COVID-19 goal.

The new investment would eventually bring capacity to 12 a month, with the possibility of going higher, Faury said.

While Tianjin now serves only Chinese customers, planes assembled there could potentially be delivered elsewhere, but these would be case-by-case decisions, he added.

In Beijing, Faury also signed a so-called general terms agreement, formalizing previously announced orders covering 160 aircraft, including 150 A320 family jets and 10 A350 wide-bodies, statements from Airbus and Macron’s office said.

Chinese carriers ordered more than 300 narrow-body aircraft from Airbus last year, valued at more than US$40 billion before customary discounts. Airlines in China make up about one-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.

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