Airbus extends its lead over Boeing in China with plans for a second finishing line

New York (CNN) Airbus Thursday announced plans to build a second final assembly line in China, in the latest sign that it has a lock on the key aviation market on rival Boeing.

The announcement came as part of a State visit by French President Emmanuel Macron to China. The signing of the agreement was witnessed by Airbus CEO Guillaume Faury, Chinese President Xi Jinping and Macron.

It will add another line to the final assembly facility Airbus opened in Tianjin, China, in 2008, which has finalized 600 A320s to date.

Airbus (EADSF) It operates four collection sites around the world, but expects Chinese air traffic in particular to grow by 5.3% annually over the next 20 years, much faster than the global average of 3.6%.

This will lead to an order of 8,420 passenger and freighter aircraft between now and 2041, accounting for more than 20% of total global demand for new aircraft, Airbus predicts.

Boeing (Bachelor’s) It has a similar forecast for China’s demand for aircraft.

Strained business relations

But the deterioration of trade relations between the US and China has essentially cut off Boeing from that key market for planes. Thursday’s deal includes the sale of another 160 Airbus planes to China, where more than 2,100 are already in service.

Boeing has not reported an order for a commercial passenger plane from a Chinese airline since 2017, only for orders from Chinese aircraft leasing companies that it can purchase on behalf of buyers outside China, or for freighters, a part of the market Boeing dominates.

Deliveries to Chinese customers by Boeing fell. So far this year, it has delivered just one 777 freighter to Air China Cargo, and only 12 have been delivered in 2022: eight freighters and four to a leasing company.

In 2017, the year the Trump administration first imposed tariffs on US imports of Chinese goods, leading to a tit-for-tat squabble, Boeing delivered 161 planes to China, and slightly more the following year. But with the 737 Max grounded and the pandemic causing a sharp drop in demand for air travel, Boeing shipments to China have plummeted. to 45 in 2019, and to 27 in the three years since.

Boeing’s best-selling 737 MAX, a competitor to Airbus’ ending A320 family in China, has had trouble re-entering the Chinese market after 20 months of grounding which started in March 2019 thereafter Two fatal accidents which killed a total of 346 people.

China was one of the last Allow the plane to fly In its airspace again, and even with this permission, none of the aircraft’s Chinese customers have accepted delivery of the 138 Boeings built for them on the ground that are still in the aircraft manufacturer’s inventory. Boeing had to try to find other buyers for some of these planes at discount prices.

The 737 Max has lost competition to the A320 family outside of China as well, but it’s not the outright shutdown that Boeing is seeing in China.

Boeing CEO Dave Calhoun said all Boeing can do is wait and hope that relations between the two countries improve so that it can once again start making significant sales and deliveries in China.

“I’m hopeful that these two great geopolitical forces will come together and support free trade again … so that they can take more aircraft shipments,” Calhoun told investors in October.

“But it’s really hard for me to find signs that things will change in China and move in our direction,” he added.

– Jake Kwon in Hong Kong contributed to this article.