PARIS: Airbus SE secured a $35 billion jet deal from China during a state visit by President Xi Jinping to the French capital, dealing a blow to Boeing Co. as it grapples with the grounding of its best-selling jet.
The order consists of 290 A320-series narrow-body planes and 10 A350 wide-bodies, Toulouse-based Airbus said after the transaction was announced in Paris on Monday, 25th March. The deal’s value is almost double that touted by French President Emmanuel Macron in January 2018 during a trip to Beijing.
The Airbus coup comes while Boeing’s own 737 Max narrow-body, the chief global rival to the A320 has been idled following two fatal crashes in five months. The U.S. planemaker is also struggling with the fallout from a China-U.S. trade war that’s seen sales to the Asian nation dry up, just as Airbus bolsters its position with an offer to expand production facilities in Tianjin.
Airbus shares rose as much as 1.9 per cent Tuesday and traded 1.8 per cent higher at 116.04 euros as of 9:51 a.m. in Paris. The stock has gained 38 per cent this year, compared with a 15 per cent advance at Boeing.
China has become the world’s most important aviation market as its fast-growing middle class spurs demand for travel.
“I would see this as part of broader trade discussions,” said Rob Stallard at Vertical Research Partners. “For the Chinese to put tariffs on Boeing aircraft would be nuclear, but you can send messages in other ways. This tells the Americans that you have got to play nice if you want us to reciprocate.”
The deal extends a history of Sino-French cooperation in aerospace, Chinese Foreign Ministry spokesman Geng Shuang said in Beijing, adding that China “has provided conditions facilitating the growth of the Airbus Company.”
Airbus’s incoming Chief Executive Officer, Guillaume Faury, said at the press conference that construction of the A320s will take place both in Tianjin and Europe, adding that the deal is “a sign of the confidence” from China. Macron called the transaction “an excellent signal.”
China will need 7,400 new passenger and freighter aircraft in the next two decades, representing almost 20 percent of total global demand, according to Airbus estimates.
Separately, China is looking at excluding Boeing’s troubled 737 Max jet from a list of American exports it would buy as part of a trade deal with the U.S., people familiar with the matter have said.
