Airbus to build new China factory for top-selling A320

BLOOMBERG

Airbus SE will double production capacity in China of its top-selling jet in a bold bet on future demand in one of the world’s biggest aviation markets.
The European planemaker will add a second final assembly line for A320 narrow-bodies at its existing factory in Tianjin, under a deal signed by Chief Executive Officer Guillaume Faury in Beijing.
The move is a boost for Chinese manufacturing as other firms like Apple Inc rethink production in the nation amid rising tensions with the US.
The expansion of the Tianjin facility will be an “important part” of Airbus’s plan to produce as many as 75 A320neo family jets a month by 2026, Faury said on a call with reporters from Beijing. At the plant, which opened in 2008, workers stitch together major sections such as wings and fuselage assemblies, giving the aircraft its final shape.
Airbus and chief rival Boeing Co have struggled to raise output amid supply-chain constraints as demand for passenger planes has surged coming out of the pandemic.
“We’re paving the way for the growth of the market here in China,” Faury said. He was part of a delegation of dozens of French business executives travelling with President Emmanuel Macron, many of whom were returning to China for the first time since the pandemic.
Airbus, however, looked set to leave China without a new plane order during Macron’s three-day state visit, despite intensive talks with Chinese customers. Bloomberg reported that the company was targeting a follow-on order that would include A350 and possibly A330neo wide-body aircraft.
Faury said Airbus remained optimistic about winning more business in China, where it holds a sizable advantage over Boeing Co. “We are all discussing with our customers and looking at the future,” said Faury. “Orders, if any — and there will be some I’m sure — will come at a later stage.”
The extra line in Tianjin will bring Chinese production capacity into proportion with its share of global demand, Faury said. It will come into service in the second half of 2025.
Airbus now builds four A320s a month in Tianjin, and Faury said it plans to raise monthly output to six later this year, restoring a pre-Covid goal.
The new investment will eventually bring capacity to 12 a month with the possibility of going higher, Faury said. While Tianjin now serves only Chinese customers, planes assembled there could potentially be delivered elsewhere, but these would be case-by-case decisions, he added.
In Beijing, Faury also signed a so-called general terms agreement, formalising previously announced orders covering 160 aircraft, including 150 A320 family jets and 10 A350 wide-bodies, according to statements from Airbus and Macron’s office. Chinese carriers ordered more than 300 narrow-body aircraft from Airbus last year, valued at more than $40 billion before customary discounts. Airlines in China make up about a fifth of Airbus deliveries.
China, with its massive global tourism potential, is only just starting to emerge from a three-year freeze on international travel because of its Covid-19 border shutdowns.
Tensions between Washington and Beijing have also been on the rise, providing Toulouse, France-based Airbus with an opening in an important market while Boeing has been effectively locked out, with no major deals signed in China since 2017.
The largest US exporter is still waiting on airlines there to restart deliveries of its re-engined 737 Max jet. China Eastern Airlines Corp and China Southern Airlines Co have said they plan to start accepting more of the model this year.