Air China makes big Airbus purchase worth $6.5b

By Chu Daye Source:Global Times Published: 2019/7/11 23:48:56

China's flag carrier Air China on Thursday said that it will pay $6.5 billion for 20 Airbus A350-900 wide-body jets. A Chinese analyst said more Chinese carriers may follow the national carrier's choice given the issues faced by US plane maker Boeing.

The purchase was valued at $6.537 billion and the planes will be delivered in batches starting from 2020 and ending in 2022, Air China said in a stock exchange filing on Thursday.

The purchase could augment Air China's fleet transport capacity by 9.7 percent, the filing said.

Chen Xin, research fellow and director of the economic division of the Institute of European Studies at the Chinese Academy of Social Sciences, said that as Boeing is still entangled in safety issues and facing lawsuits, a purchase from Airbus appears to be the only natural choice for Chinese airlines in order to replenish their fleets.

Besides China's homegrown big planes, US-based Boeing and Europe-based Airbus are the world's two main providers of large jet liners.

"The uncertainty arising from the China-US trade war is another factor putting Chinese carriers off US purchases," Chen told the Global Times on Thursday.

The Air China purchase may signal more buying decisions for other Chinese carriers, Chen said.

The purchase also followed another big-ticket deal won by Airbus. In March, China Aviation Supplies Holding Co signed a massive deal to purchase 300  Airbus planes, including 10 A350 planes, during Chinese President Xi Jinping's visit to France.

China was one of the first countries to ground the Boeing 737 Max in March following crashes in Indonesia and Ethiopia that killed a total of 346 people.

Three Chinese carriers including Air China also demanded compensation in May from Boeing for the grounding of 737 Max jetliners after the crashes.

Air China and its subsidiaries had a fleet of 684 planes as of the end of 2018, according to the company website.

Qi Qi, an associate professor with the Guangzhou Civil Aviation College, told the Global Times that Boeing wide-body jet liners are competitive as there are more 787 planes in the world's fleet than A350s. 

But Boeing needs to rehabilitate market confidence in the safety of its products, Qi said.

"Boeing will only see a pickup in Chinese business after bilateral political and economic ties are restored," Qi said. "Domestic carriers are politically savvy." 

Since 2017, Boeing has seen no new orders from Chinese airlines. 

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