• 

  Airbus

  Stock Code:

  AIR

  Date Founded:

  1970-12-18

  CEO:

  Guillaume Faury

  Headquarters Location:

  Toulouse, France

  Key Product Lines:

  Airbus A220, Airbus A320, Airbus A330, Airbus A340, Airbus A350, Airbus A380

  Business Type:

  Planemaker

As four of China's largest carriers expand their fleets, Airbus takes the spoils over its arch-rival Boeing in the battle for dominance of the skies over China and beyond.

Airbus wins again

Airbus has dealt a further blow to its nearest rival, Boeing, winning orders for almost 300 narrowbody aircraft worth over US$37 billion in a single day. This order represents a record for the European planemaker, which appears to be stretching its lead over its US-based rival in terms of orders for new planes in 2022.

In addition to the orders received from the four carriers involved, Airbus will supply an additional 19 aircraft through lease agreements. The details of the mass order have been announced by Airbus today, clearly proud of the inroads it is making in the Chinese commercial airplane market.

The details of this immense order break down as follows -

• China Eastern Airlines - A320neo (100)
• Air China - A320neo (64)
• Shenzhen Airlines - A320neo (32)
• China Southern - A320neo (96) plus an additional 19 of the type via lease agreements.

The China Southern aircraft will be delivered from 2024 to 2027. Meanwhile, deliveries of the aircraft ordered by Air China will begin in 2023 until 2027 and those to Shenzhen Airlines from 2024 to 2026.

China Eastern's order is the first it has made for narrowbody aircraft since the loss of flight MU5735 back in March of this year. The accident, still officially under investigation, involved one of the airline's Boeing 737-800 aircraft.

Announcing the enormous order, Christian Scherer, Airbus Chief Commercial Officer and Head of International said,

"These new orders demonstrate the strong confidence in Airbus from our customers. It is also a solid endorsement from our airline customers in China of the performance, quality, fuel efficiency, and sustainability of the world's leading family of single-aisle aircraft. We commend the excellent work by George Xu and the entire Airbus China team as well as our customers' teams for having concluded these long and extensive discussions that have taken place throughout the difficult COVID pandemic."

The battle for Chinese orders

In recent months, the two major manufacturers have been increasing their efforts to win such major orders from the leading Chinese carriers, who have been facing the dual dilemma of rapidly rising demand in recent years combined with the need to replace older airframes within their fleets.

China, the world's most populous nation, is a crucial market for both Airbus and Boeing, and these latest orders come at a time of rising political tensions between the US and China. Airbus shares gained as much as 4% following the announcement, whereas shares in Boeing fell 1.3% in pre-market US trading.

Given the size of the order backlogs held by both manufacturers, these commitments clearly show that while certain COVID-related travel restrictions remain in place across China, the airline industry in the country is bullish regarding future growth in the travel sector. This latest announcement represents the first significant order from Chinese airlines in the post-pandemic era.

China Southern's eye-catching order

The order from China Southern is particularly noteworthy. While Airbus has sold aircraft to the carrier in the past, the airline has remained Boeing's biggest Chinese customer for years. However, this relationship may have soured when China Southern decided to remove more than 100 Boeing 737 MAX aircraft from its order book, citing the uncertainty over delivery schedules.

China Southern had previously outlined plans to rapidly expand its 737 MAX fleet, stating that it intended to take delivery of an additional 39 aircraft this year, building toward a total of 103 deliveries through 2024.

China was the first to ground the plane following the fatal crashes involving the type in Indonesia (2018) and Ethiopia (2019). None of China's other state-owned carriers have said if they might resume taking the MAX once it's officially back in service.

At the end of 2021, China Southern, the country's largest airline, had a fleet of 399 Boeing narrowbodies, according to its latest annual report. It also had 334 Airbus A320 series narrowbodies at the end of last year.

Just a few days ago, the airline began 737 MAX test flights which some took as an implication that an imminent return to service of the grounded jets may be on the cards.

Airbus stealing a march over Boeing

Since the MAX grounding, Airbus has soared ahead of Boeing in securing both new orders and market share for narrowbody jets worldwide. This is despite the European planemaker facing its own struggles with ramping up production to meet surging demand.

Just last month, Airbus Chief Executive Officer Guillaume Faury said that delays in new engines meant Airbus could not deliver otherwise fully-built jets.

To meet the growing backlog in its order book, Airbus is driving on with its plans to ramp up production of its bestselling A320 family of jets to 75 a month by 2025 as it looks to widen the lead between itself and Boeing. In 2021, Airbus received orders for 507 aircraft compared to the 497 ordered from Boeing.

The US-based manufacturer is also facing a range of issues that must be distracting from its core business of selling airplanes. These include the recent announcement that the US Congress is considering another audit on the manufacturer following a catalog of recent incidents involving the 737 MAX.

The importance of a strong aviation sector

A solid civil aviation industry throughout China is vital for its economy. In a country with a population of 1.4 billion people dispersed over a land mass in excess of 9.6 million square kilometers (6 million square miles), good air links are vital to connect communities, enhance trade and facilitate the movement of people and goods across the country.

Transportation administration officials have recently confirmed that regularly scheduled international passenger flights from China will increase. The announcement comes as Beijing rolls out an extensive economic stimulus plan that includes several significant provisions for the country's aviation industry.

The recovery revealed at the end of May called for the gradual reopening of international borders and a cash incentive for airlines to maintain domestic connectivity services. These measures seek to stabilize the income of frontline air employees and offset operating expenses, especially for small and medium-sized Chinese airlines.

With the mega-order announced by Airbus today, the signs of confidence that a full recovery of the national airline industry will be made are clear. With deliveries of the new aircraft due to start next year, the airlines involved will be keen to get back to growth levels seen prior to the COVID-19 health pandemic.

What are your thoughts on this huge Airbus order from China? What do you think this implies for Boeing's future in the country? Let us know in the comments.