Airbus’ RM144b China deal, a blow to Boeing

By BLOOMBERG

PARIS • Airbus SE secured a US$35 billion (RM143.5 billion) jet deal from China during a state visit by President Xi Jinping to the French capital, dealing a blow to Boeing Co as it grapples with the grounding of its bestselling jet.

The mammoth order consists of 290 A320-series narrow- body planes and 10 A350 wide-bodies, Toulouse- based Airbus said after the transaction was announced in Paris on Monday. The deal’s value is almost double that touted by French President Emmanuel Macron in January 2018 during a trip to Beijing.

The Airbus coup comes while Boeing’s own 737 Max narrow-body — the chief global rival to the A320 — has been idled following two fatal crashes in five months. The US planemaker is also struggling with the fallout from a China- US trade war that’s seen sales to the Asian nation dry up, just as Airbus bolsters its position with an offer to expand production facilities in Tianjin.

Airbus shares rose as much as 1.9% yesterday and traded 1.8% higher at €116.04 (RM533.78) as of 9:51am in Paris. The stock has gained 38% this year, compared to a 15% advance at Boeing.

China has become the world’s most important aviation market as its fast-growing middle class spurs demand for travel.

The country has traditionally sought to keep a balance between the two western planemakers as it seeks to jumpstart manufacturing on its own soil, but Chicago-based Boeing’s order prospects have been complicated by the trade clash.

“I would see this as part of broader trade discussions,” said Rob Stallard at Vertical Research Partners. “For the Chinese to put tariffs on Boeing aircraft would be nuclear, but you can send messages in other ways. This tells the Americans that you have got to play nice if you want us to reciprocate.”

The deal extends a history of Sino-French cooperation in aerospace, Chinese Foreign Ministry spokesman Geng Shuang said in Beijing, adding that China “has provided conditions facilitating the growth of the Airbus company.”

Macron originally put the value of a likely order at US$18 billion. A firm order failed to materialise last year despite a second French state visit in June and a delegation of top Airbus executives in September.

The deal announced in Paris will include both Neo — for new engine option — and so-called classic or CEO versions of the A319, A320 and A321, though the majority will be A320neos and A321neos, according to officials. China typically orders planes in large batches and allocates them to airlines later.

The latest A320neo model has a list price of US$110.6 million and the A350-900 sells for US$317.4 million before discounts. — Bloomberg