Tuesday, June 23, 2009

Airbus delivers first China-built plane to new owner

By Kirby Chien
TIANJIN, China, June 23 (Reuters) - Airbus delivered its first plane assembled outside Europe to its Chinese owner on Tuesday, as the world's largest plane maker and rival Boeing (BA.N) seek growth in major developing markets to combat weak demand at home.
European consortium EADS (EAD.PA) handed the A320 plane, which will be operated by Sichuan Airlines, to Dragon Aviation Leasing. Another 10 planes will be assembled this year in China.
"This is a special milestone in our strategic partnership with China," Airbus Chief Executive Tom Enders said at a delivery ceremony. "This demonstrates the deep commitment of Airbus to build a strong future for China's aviation industry."
Airbus began assembling the A320 in the port city of Tianjin near Beijing in September from parts shipped from Europe, and plans to assemble four planes a month in China by end-2011.
The plane maker has estimated China would need more than 3,000 large aircraft by 2025, including 180 super-jumbo passenger jets.
"All the forecasts, not only ours, say (over the) next 20 years, there will be at least 2,500-3,000 aircraft needed, passengers and also freighters in this great market," Enders later told Reuters.
"So for us not to be in China would be a mistake."
China Eastern Airlines (600115.SS) (0670.HK), one of the country's top three carriers, said last week it was committed to buying buy 20 Airbus A320 aircraft for $1.45 billion at list price, as part of a 150-aircraft order that China made in 2007.
Chinese firms have ordered more than 700 aircraft from Airbus, the majority of which are in the A320 family.
"We are not just selling aircraft to China, but designing aircraft, manufacturing aircraft and supporting aircraft in China," said Enders.
"China is certainly a centrepiece of our strategy. Chinese demand for modern airlines is immense."
Enders noted that 15 percent of Airbus deliveries currently go to China. "I think that's very impressive and I have no doubt we will get more orders out of the Chinese market."
"We still have a very impressive backlog with Chinese airlines. So we still have lots of aircraft to deliver out of Tianjin," he told Reuters.
China is also building its first regional aircraft, the 90-seat ARJ21-700 jet, that made its maiden test flight late last year and is scheduled for commercial delivery in mid-2010. [ID:nPEK109433]
But the country's broader ambition is to eventually challenge the global dominance of Airbus and Boeing for long haul and wide bodied planes, although analysts say such a goal is lofty and could take decades.
Boeing and Airbus are headed for their worst annual order tally in at least 15 years as struggling airlines cancel or defer almost as many planes as they are buying. [ID:nLJ544908]
The airline industry is expected to lose $9 billion this year alone, according to the International Air Transport Association, battered by weak travel demand in an economic downturn, high fuel prices and the H1N1 flu pandemic.
Airbus has been criticised by European workers and governments that say the move adds to outsourcing fears amid a global recession and could result in the loss of European technology to a potential jet-making rival. (Additional reporting by Reuters Television) (Editing by Ian Geoghegan) ($=6.83 yuan)

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