By Bloomberg News
© Bloomberg Tom Enders
(Bloomberg) -- Airbus SE has sent a high-powered delegation to China seeking to firm up a potential $18 billion jet order, according to people familiar with the matter, in a deal that would underscore how the Asian nation is still doing business in spite of a trade war with the U.S.
The possible order for about 180 A320 Neo narrow-body planes, first touted in January, will be discussed during the trip this week that includes Airbus Chief Executive Officer Tom Enders and commercial aircraft president Guillaume Faury, said the people, who asked not to be named as the talks aren’t public.
The executives are also in China to commemorate the 10th anniversary of Airbus’s first Chinese assembly line and the opening of a helicopter plant. The company said it doesn’t comment on the travel plans of management or confidential discussions with customers. The CAAC, China’s aviation regulator, said Wednesday it had met with Faury, without elaborating on the context.
While a final deal may not be reached, President Xi Jinping is keen to parade the purchase at the China International Import Expo in Shanghai from Nov. 5, where a series of deals demonstrating the nation’s role in global trade is expected to be announced, according to the people. The order could also take center stage at the Zhuhai air show in southern China, starting a day later.
Airbus rose as much as 3.1 percent. The stock was trading 2.6 percent higher at 107.78 euros as of 4:26 p.m. in Paris, taking gains this year to 30 percent and valuing the planemaker at 83.6 billion euros ($98 billion).
Battleground
China has become a battleground for Airbus and Boeing Co. as the manufacturing titans seek to dominate an aviation market expected to become the world’s biggest early next decade. The government, which negotiates its aircraft deals via a central purchasing group, typically splits orders between the planemakers to meet its rapid expansion goals.
“The Chinese government has traditionally wrapped up new aircraft orders with a broader geopolitical perspective, and given the current trade tensions between the U.S. and China, this of course favors Airbus at the moment,” said Rob Stallard, an analyst at Vertical Research Partners.
Ultimately, though, the European company doesn’t have the spare capacity to displace its rival without having a serious impact on the expansion plans of Chinese airlines, Stallard said.
China has fired warning shots at Boeing in its trade dispute with President Donald Trump, threatening a 25 percent tariff on imports of 737 narrow-bodies that are nearing the end of their production run. The duties, which haven’t been implemented, would stop short of impacting the U.S. company’s upgraded 737 Max series.
An order for Airbus wouldn’t by itself indicate that China was intent on excluding Boeing. The A320 deal has already twice failed to materialize during visits to Beijing by French President Emmanuel Macron and Prime Minister Edouard Philippe, and with the planemaker operating the assembly line for the model in Tianjin, east of Beijing, China already has sufficient incentive to buy more of the aircraft.
The Airbus visit also presents an opportunity for new sales chief Christian Scherer to meet with key Chinese figures after his appointment less than two weeks ago, the people said.
©2018 Bloomberg L.P.
(Bloomberg) -- Airbus SE has sent a high-powered delegation to China seeking to firm up a potential $18 billion jet order, according to people familiar with the matter, in a deal that would underscore how the Asian nation is still doing business in spite of a trade war with the U.S.
The possible order for about 180 A320 Neo narrow-body planes, first touted in January, will be discussed during the trip this week that includes Airbus Chief Executive Officer Tom Enders and commercial aircraft president Guillaume Faury, said the people, who asked not to be named as the talks aren’t public.
The executives are also in China to commemorate the 10th anniversary of Airbus’s first Chinese assembly line and the opening of a helicopter plant. The company said it doesn’t comment on the travel plans of management or confidential discussions with customers. The CAAC, China’s aviation regulator, said Wednesday it had met with Faury, without elaborating on the context.
While a final deal may not be reached, President Xi Jinping is keen to parade the purchase at the China International Import Expo in Shanghai from Nov. 5, where a series of deals demonstrating the nation’s role in global trade is expected to be announced, according to the people. The order could also take center stage at the Zhuhai air show in southern China, starting a day later.
Airbus rose as much as 3.1 percent. The stock was trading 2.6 percent higher at 107.78 euros as of 4:26 p.m. in Paris, taking gains this year to 30 percent and valuing the planemaker at 83.6 billion euros ($98 billion).
China has become a battleground for Airbus and Boeing Co. as the manufacturing titans seek to dominate an aviation market expected to become the world’s biggest early next decade. The government, which negotiates its aircraft deals via a central purchasing group, typically splits orders between the planemakers to meet its rapid expansion goals.
“The Chinese government has traditionally wrapped up new aircraft orders with a broader geopolitical perspective, and given the current trade tensions between the U.S. and China, this of course favors Airbus at the moment,” said Rob Stallard, an analyst at Vertical Research Partners.
Ultimately, though, the European company doesn’t have the spare capacity to displace its rival without having a serious impact on the expansion plans of Chinese airlines, Stallard said.
China has fired warning shots at Boeing in its trade dispute with President Donald Trump, threatening a 25 percent tariff on imports of 737 narrow-bodies that are nearing the end of their production run. The duties, which haven’t been implemented, would stop short of impacting the U.S. company’s upgraded 737 Max series.
An order for Airbus wouldn’t by itself indicate that China was intent on excluding Boeing. The A320 deal has already twice failed to materialize during visits to Beijing by French President Emmanuel Macron and Prime Minister Edouard Philippe, and with the planemaker operating the assembly line for the model in Tianjin, east of Beijing, China already has sufficient incentive to buy more of the aircraft.
The Airbus visit also presents an opportunity for new sales chief Christian Scherer to meet with key Chinese figures after his appointment less than two weeks ago, the people said.
©2018 Bloomberg L.P.
