European planemaker Airbus is negotiating a new round of plane orders with China, coinciding with a visit by French President Emmanuel Macron to the economic superpower later this week, government and industry sources said. The potential deal for dozens of jets comes amid worsening relations between Washington and Beijing, which have seen China's usually balanced airplane imports tilt towards Airbus in recent years.
"Negotiations are underway," an official in Macron's office said, adding that any agreements by French firms would not merely consist of repackaging earlier announcements. An industry source cautioned there were several moving parts in the talks, with details not yet finalised. Macron is due to conduct the state visit to China on April 5-7, with a delegation of company chiefs from France-based companies, expected to include Airbus CEO Guillaume Faury.
Airbus declined to comment on any airplane negotiations or the agenda of senior management. Shares in the planemaker outperformed, rising almost 2%. Diplomats say high-level visits by European or U.S. leaders frequently generate aircraft purchase deals that serve as a barometer of diplomatic ties, although announcements also tend to be scrutinised for their additional economic impact. In July last year, China's "Big Three" state airlines pledged to buy a total of 292 Airbus jets in the biggest order by Chinese carriers since the start of the COVID-19 pandemic. In November, China's state buying agency said it had signed a deal for 140 Airbus jets during a visit by Germany Chancellor Olaf Scholz, but the planemaker said the announcement covered deals already on its books, including part of the July deal.
INCREASED ASSEMBLY?
Talks could also touch on Airbus' industrial presence in China, where since 2008 it has had an assembly line for single-aisle jets. Airbus is adding capacity worldwide to help support a planned 50% increase in the output of the jets by 2026. In 2018, Airbus agreed to raise assembly capacity in the port city of Tianjin, near Beijing, to six A320neo-family jets a month from four. But it has long had ambitions to raise this to eight a month, a person familiar with the plans said. Airbus' Tianjin production is tied to airline orders through volumes agreed periodically via a consortium with the local free trade zone and national aerospace group AVIC. In a breakthrough for rival Boeing (BA.N), state-owned China and Eastern and China Southern last week said in filings they would resume taking delivery of the Boeing 737 MAX this year. Deliveries of the jet have been approved by Chinese authorities following an almost two-year worldwide grounding following fatal crashes in 2018 and 2019, but China has been among the last major markets to return the plane to service. Besides demand for freighters, new orders for U.S. airplanes by China remains sluggish, however, with the last triple-digit state package dating back to 2015, according to Boeing data.