Airbus signs 160 aircraft deal with Chinese partner, to open second assembly line in Tianjin
Published: Apr 06, 2023 10:24 PM
Airbus' assembly line in Tianjin  Photo: Courtesy of Airbus

Airbus' assembly line in Tianjin Photo: Courtesy of Airbus

Airbus announced on Thursday it signed a 160 commercial aircraft purchase agreement with a Chinese partner, and it will open a second assembly line in Tianjin, further expanding its presence in one of the largest aviation markets in the world. 

The package deal is made as French President Emmanuel Macron made a state visit to China. Macron's visit is the first time a European leader visited China after China fully reopened exchanges with other countries.

The deal was done with the China Aviation Supplies Holding Co, for 150 A320 Family aircraft and 10 A350-900 widebody aircraft, reflecting the strong demand in all market segments from Chinese carriers.

In addition, Airbus will build a second assembly line at its Tianjin site to double its output. The agreement will contribute to Airbus' overall rate objective of 75 aircraft per month in 2026 throughout its global production network.

This new cooperation agreement also aims at optimizing the Sustainable Aviation Fuels (SAF) supply chain by diversifying the sources and enhancing SAF production toward the ambition of using 10 percent SAF by 2030, Airbus said.

The deals show our confidence in China's investment environment, as the Chinese aviation industry will continue to grow, said Airbus CEO Guillaume Faury during an interview on Thursday.

Setting up the second assembly line in Tianjin means that 20 percent of single-aisle aircraft worldwide will be assembled in Tianjin. Upon completion at the end of 2025, there will be 10 assembly lines in the world, which will better help the production pace reach 75 aircraft per month in 2026, he said.  

China now accounts for 20 percent of the annual deliveries by Airbus in the world. Airbus has produced 600 single-aisle aircraft in Tianjin and there are about 2,100 Airbus aircraft in China, which means that about 30 percent of the Airbus aircraft flying in China were manufactured in China.

Airbus CEO Guillaume Faury speaking during a group interview on April 6, 2023. Photo: Courtesy of Airbus

Airbus CEO Guillaume Faury speaking during a group interview on April 6, 2023. Photo: Courtesy of Airbus

When Airbus proposed the idea of building the first assembly line in Tianjin in 2005, the market share for Airbus in China was less than 20 percent, but the ratio increased to 50 percent within 10 years. "The resolution is the localization," said George Xu, CEO of Airbus China.

When asked to comment on increasing calls for decoupling between China and Europe, Faury said the aviation industry is an international industry, and Airbus is also an international company. 

"We need a global industrial chain, and we also rely on global businesses. High globalization is the characteristic of the aviation industry," Faury said.

Macron also said "we mustn't decouple with China." 

"There's a rivalry with the European Union that we fully acknowledge, but we also know that there are major international issues that we need to work on together," he added, according to Bloomberg.

In the past decades, Airbus has been providing Chinese customers with the most modern and comprehensive family of aircraft on the market. China has become the biggest single country market of Airbus around the world. As of the end of February 2023, the Airbus in-service fleet in the Chinese mainland reached 2,127 aircraft, for a 54 percent market share.

The country is also home to a growing number of Airbus manufacturing and support operations, including its first final assembly line outside Europe, which was inaugurated in Tianjin in September 2008. This joint venture between Airbus and a Chinese consortium of the Tianjin Free Trade Zone and Aviation Industry Corp of China was extended in March 2014 until 2025. 

Airbus CEO Guillaume Faury speaking during a group interview on April 6, 2023. Photo: Courtesy of Airbus

Airbus CEO Guillaume Faury speaking during a group interview on April 6, 2023. Photo: Courtesy of Airbus

Faury said the global aviation industry suffered in the pandemic, and the supply chain was hurt. But the lifting of travel restrictions has brought a strong recovery of the industry, which is faster than the speed of recovery of the supply chain. 

As a large company, one of the difficulties that Airbus faces is that it needs to go deep into every link in the supply chain to see what difficulties the specific suppliers are facing and help them find solutions so as to improve. One of our ultimate goals is to enable all suppliers to deliver their products on time, Faury said. 

In the past three years, Chinese airlines have received a total of 353 Airbus aircraft, which also shows the confidence that Chinese airlines have always had in the market.

Three state-owned airlines - China Southern, Air China and China Eastern - in July last year announced a deal with Airbus to buy 292 aircraft valued at around $37 billion in total.

It was the second time China signed such a big deal after Chinese leaders visited Europe in March 2019, when Airbus signed a deal worth tens of billions of dollars to sell 300 aircraft to China.