Airbus extends its lead over Boeing in China

New York (CNN) Airbus announced plans for a second final-assembly line in China on Thursday, the latest sign that it has a lock on the key airline market over rival Boeing.

This announcement came in part French President Emmanuel Macron is on a state visit to China. Chinese President Xi Jinping and Macron witnessed the signing of the agreement by Airbus CEO Guillaume Faury.

It will add another line to the final-assembly facility Airbus opened in Tianjin, China in 2008, which has put the finishing touches on 600 A320s to date.

Airbus (EADSF) It operates four assembly sites around the world, but China’s aviation industry in particular is forecast to grow 5.3% annually over the next 20 years, significantly faster than the global average of 3.6%.

This will lead to demand for 8,420 passenger and cargo aircraft between now and 2041, which Airbus predicts will be more than 20% of the world’s total demand for new aircraft.

Boeing (B.A) It has similar projections for China’s aircraft demand.

Trade relations were strained

But worsening trade relations between the U.S. and China have essentially locked Boeing out of a major market for the plane. Thursday’s deal includes the sale of 160 more Airbus aircraft to China, where more than 2,100 aircraft are already in service.

Boeing has not reported any orders for commercial passenger aircraft from Chinese airlines since 2017, only for orders from Chinese aircraft leasing companies on behalf of buyers outside China or for cargo aircraft. Boeing dominates.

Deliveries by Boeing to Chinese customers have also fallen. China Air Cargo has delivered just one 777 freighter so far this year, and only 12 jets for 2022: eight freighters and four to the leasing company.

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In 2017, the Trump administration first imposed tariffs on U.S. imports of Chinese goods, sparking a trade frenzy that prompted Boeing to deliver 161 jets to China, with slightly more the following year. But Boeing’s deliveries to China have slumped as the grounding of the 737 Max and a sharp drop in demand for air travel due to the pandemic. 45 in 2019 and 27 in the three years since.

Boeing’s best-selling 737 Max, a rival to the A320 family that Airbus is ending in China, has continued to have trouble re-entering the Chinese market. 20 months landing It started in March 2019 Two fatal accidents A total of 346 people were killed.

China was one of the last countries to go Let the plane fly Back in its airspace, even with that permission, none of the plane’s Chinese customers have accepted deliveries of the 138 Boeings built for them on the ground, which are still sitting in the planemaker’s inventory. Boeing was forced to find buyers for some of those planes at a discount.

The 737 Max has also lost competition with the A320 family outside of China, but not the total shutdown that Boeing is experiencing in China.

Boeing CEO Dave Calhoun said all Boeing can do is wait and hope that relations between the two countries improve so that it can resume significant sales and deliveries in China.

“My hope is that these two major geopolitical powers will come together and reauthorize free trade … so they can distribute more airplanes,” Calhoun told investors in October.

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“But I find it very difficult to find signals in China that things are changing and moving in our direction,” he added.

— Jack Kwan in Hong Kong contributed to this article.

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