Tuesday, June 23, 2009

Airbus delivers first China-built plane to owner

TIANJIN, China - Airbus delivered its first plane assembled outside Europe to its Chinese owner on Tuesday, as the world’s largest plane maker extends its reach into fast-growing markets to fend off rival Boeing.

Airbus, owned by European consortium EADS, handed Dragon Aviation Leasing a A320 plane emblazoned with a bright yellow dragon that coiled around the length of the fuselage, a further sign of China’s growing clout in the global aviation industry.

“China is certainly a centrepiece of our strategy,” Airbus Chief Executive Tom Enders said at the delivery ceremony.

“We are not just selling aircraft to China, but designing aircraft, manufacturing aircraft and supporting aircraft in China,” said Enders.

Airbus — which owns 51 percent of the venture, partnering with Chinese state investors — began assembling the A320 in the port city of Tianjin near Beijing in September from parts made mostly in Europe. It plans to assemble four planes a month in China by the end of 2011.

But the milestone comes as 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.

In addition, China is spreading its own wings, as the country’s first regional aircraft, the 90-seat ARJ21-700 jet, made its maiden test flight late last year and is scheduled for commercial delivery in mid-2010.

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 have said that such a goal is lofty and could take decades.

“Our industrial footprint in China will expand considerably in the coming years,” said Airbus China President Laurence Barron.

Barron said his company now purchases more than $100 million in components, including door frames, wings and composite materials, from China, and that figure that is expected to reach $500 million by 2015.

“This demonstrates the deep commitment of Airbus to build a strong future for China’s aviation industry,” Airbus CEO Enders said.

Rough weather

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.

The tough economic times have hastened the move toward globalisation, an Airbus strategy that has been criticised by European workers and governments that say it could result in the loss of European technology to a potential jet-making rival.

“There is no cooperation in industry without a certain transfer of knowledge, processes and technology,” said Enders. “It’s not just in China, but everywhere in the world.”

China can often influence that cooperation because of the leverage gained from its huge demand for goods.

China Eastern Airlines, 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 much larger 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.

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,” he said. “Chinese demand for modern airlines is immense.”

The plane maker has estimated China would need more than 3,000 large aircraft by 2025, including 180 super-jumbo passenger jets.

“So for us not to be in China would be a mistake,” Enders said.

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