Airbus Is Close to Securing Big Chinese Order, Macron Says

By Jeremy Page and Trefor MossFeaturesDow Jones Newswires

China will finalize orders for 184 Airbus A320 aircraft soon, French President Emmanuel Macron said following talks with his Chinese counterpart as he wrapped up his three-day visit.

Chinese President Xi Jinping pledged to maintain order volumes and parity between Airbus SE and rival Boeing Co., Mr. Macron told a news conference Wednesday. He said France also hoped to strike deals to sell Airbus A350 and A380 models to China in the coming weeks or months.

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Airbus said Tuesday that it would increase production at its A320 final-assembly line in the northeast city of Tianjin and pledged to deepen its industrial cooperation with China. Mr. Macron didn't specify when the deal for the new planes would be finalized. An order for 184 A320s would be worth around $20 billion at list prices, but buyers often secure discounts when buying in bulk.

Mr. Macron's boost for Airbus comes as the company is struggling to find buyers for the superjumbo A380, making the fast-growing China market crucial. But trade tensions are also on the rise between China and the U.S., home to Airbus rival Boeing.

Seattle-based Boeing is due to open its first overseas production facility in eastern China this year, though it will only fit and paint jets prebuilt in the U.S. Boeing announced $37 billion in Chinese orders during President Donald Trump's visit to China in November, though some of those orders appeared to have been disclosed before.

Expanding opportunities for French businesses was a key part of Mr. Macron's China mission as his government tries to reorient France's trade toward Asia. He brought along a delegation of corporate leaders and praised Mr. Xi's plan for massive infrastructure spending to promote trade and economic development across Eurasia and Africa.

Securing A380 sales in China has become a priority for Airbus, after the aircraft's main buyer, Dubai's Emirates Airline, failed to close an expected order for 30 new jets late last year.

China has only ordered five A380s to date. Airbus's former China head, Eric Chen, told reporters last year that he expected local demand for up to 70 superjumbos given the continuing surge in Chinese demand for air travel.

An Airbus spokeswoman declined to say whether the company would agree to build the A380 in China with an aim to secure more orders.

Buying A380s to secure an industrial partnership may be attractive to China, which has a strategic aim to become a world aerospace power, but "if it was up to management at Chinese airlines, they wouldn't order more A380s," said Will Horton, senior analyst at the CAPA Center for Aviation, a provider of aviation intelligence. Chinese airlines are focused on boosting revenue and don't want an expensive jet that is hard to fill, he said.

China has also moved away from the hub-and-spoke model for which the A380 was designed, choosing instead to connect regional airports directly with foreign cities, said Richard Aboulafia, vice president at Teal Group Corp., an aerospace consultancy. "The A380 is the perfect jet for China in 1993," he said.

Write to Jeremy Page at jeremy.page@wsj.com and Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

January 10, 2018 07:54 ET (12:54 GMT)