In a surprise announcement just a couple of weeks before the Farnborough International Airshow, Airbus announced that four Chinese airlines have closed orders for 292 A320neo family aircraft, displacing Boeing and its 737 MAX in a key global aviation market.
As reported by Bloomberg, China Eastern will purchase 100 aircraft, Air China 64 and Shenzen Airlines 32. In addition, China Southern will buy 96 units and lease 19 more.
«These new orders demonstrate our customers’ strong confidence in Airbus. It is also a strong endorsement by our airline customers in China of the performance, quality, fuel efficiency and sustainability of the world’s leading single-aisle aircraft family,» said Christian Scherer, Airbus Chief Commercial Officer and Head of International.
«We commend the excellent work of George Xu and the entire Airbus China team, as well as our customer teams, for bringing these long and extensive discussions that have taken place during the difficult COVID pandemic to a successful conclusion,» he added.
Boeing loses China Southern, a loyal customer
The deal, valued at about $37 billion at list prices, is a major blow to Boeing, which in May had already received the sad news that China Southern, a long-standing and loyal customer, was withdrawing 100 737 MAXs from its fleet plans because of «uncertainty» in deliveries.
The Chinese market is key for global aviation: the three major manufacturers – Boeing, Airbus and Embraer – have local commercial and industrial representation with the aim of increasing their share of the country’s booming domestic market, which accounts for about 20% of global traffic.
The recertification of the 737 MAX by the Chinese authority is still delayed and, at this stage, there is no doubt about the political component behind the delay: while the aircraft is operating normally -although with a particularly watchful eye from the different aeronautical authorities-, China has not yet issued a decision on the return of Boeing’s workhorse in its skies.
The big dilemma: production
While Boeing continues to deal with its demons, Airbus faces a growth problem: how much more can it squeeze its production line to cope with these new orders?
The company’s intention is to quickly bring its production rate to seventy-five aircraft per month, but in a supply chain that is already stretched to the limit, meeting that target by 2025 seems utopian. Nothing prevents Airbus from opening more production lines at its various industrial sites, but the pressure on its suppliers – including engine manufacturers – may put it in a risky situation sooner rather than later.
COMAC C919: Better luck next time
This mega-order also makes it clear that the local aviation industry’s big bet, the COMAC C919, is missing at least one more shot in the arm: while China Eastern and Air China have orders for the C919 and China Southern seems to show no interest, the gap between foreign and indigenous aircraft backlog widens dramatically with these contracts.
While it is no surprise, the C919 cannot compete head-to-head against the A320neo, let alone the A321neo, A321LR and A321XLR star versions of the family. Nor can it, for the moment, commit to a production and delivery rate that will serve the airlines, so the COMAC train seems to be leaving the station.
Thus, the C919 is late to the party as it struggles between being a test bed for Chinese aircraft production capability – that’s what they had built the ARJ21 for, but oh well – or a collector’s item among Western fleets that outperform it in consumption, capacity, and performance.
In any case, if there is a victim of this order won by Airbus, it is not so much the Commercial Aircraft Corporation of China, but a rival that has been having a pretty bad decade. And with a good chance of getting worse.
