Airbus Receives $22.8BN Order From China

air-bus

European aerospace corporation Airbus SE has recently struck a deal to supply around 140 single-aisle and wide-body jets priced at around $22 billion to China Aviation Supplies Co. The state-owned company will be distributing the aircraft to airline operators in the next five or six years.

According to reports, Airbus is also in talks and discussions with the Chinese state-owned company in selling A380 superjumbos as China aims to become one of the world’s biggest aviation market. The company suffered a decline in the sales of the A380 superjumbo recently due to issues with its execution. China Aviation Airlines currently has five A380s.

The manufacturer has been able to secure a deal to sell one hundred A320-series jet with both current and new engine versions along with forty of Airbus’ A350’s according to Airbus chief executive officer Tom Enders during Chinese President Xi Jinping’s visit to Berlin, Germany. The agreement is still flexible and set for pending negotiations with the Chinese company.

According to Enders, China is currently one of the world’s most important markets for aviation. The agreement which was signed by China Aviation Supplies will be utilized by the country in becoming the country with the biggest aviation market by the year 2024.

Airbus is still facing competition from its top rival Boeing Co who previously forecasted that China will be needing around 6,810 aircraft in the next two decades until 2035. This will mean that the country’s market will reach $1 trillion over time. Demand for travel in the country is predicted to rise by 6.1% every year by 2035.

Last year, the market rose by 11%, three times bigger than the United States with demand for seats rising at a fast rate. The company currently has a production of 320 planes in Beijing with the output being divided between the final assembly line in Beijing and in Europe.

The company just finished a merger with its parent company and has made changes in its plane production including the commercial sales team reporting line being transferred to Enders. Although the company has been receiving far less volume orders in the past quarter, Enders stated that the commercial aircraft head will focus on deliveries instead.

Meanwhile, the company recently asked the German defense department to give domestic firms a large share of a 4-billion euro contract reserved for Germany’s next generation heavy-lift military helicopters. Although German officials stated that they prefer low-risk heavy-lift helicopters expected to be provided by Airbus rivals Boeing Co and Lockheed Martin Corp, Airbus is looking to check the requirements for the military needs after it is released next year by the defense ministry and try to negotiate some good terms to be rewarded as a contractor.

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