A busy year for Airbus in China
Updated: 2008-02-25 15:21
Selling more aircraft has always been a top priority for any plane maker. But a big challenge now facing Airbus and Boeing is getting planes off their production lines on time to meet the strong market demand.
"We should really concentrate on what we have already sold," says Laurence Barron, Airbus China president.
New orders in the last three years have been exceptional for Airbus and Boeing. They together received more than 4,000 orders in 2005 and 2006. In 2007, they booked more than 2,800 firm orders.
Air traffic in countries like China and India is increasing at double-digits each year to keep pace with their dazzling economic growth. Fast-growing carriers in the Middle East are building their fleets. Older, established airlines are also stepping up their buying after a hibernation following the terrorist attacks on September 11, 2001. On top of all that demand, a depreciating dollar is increasing the purchasing power of many carriers because new jets are priced in dollars.
"Despite increasing our production rates to historic levels, we still cannot reduce our backlogs. This year we (Airbus and Boeing) each sold around 1,400 aircraft, but we only delivered around 900, which means we are selling two and a half times what we are producing," Barron says.
"It is an unprecedented situation," Barron says, adding that both companies have essentially sold out for the next five years.
Airbus plans to deliver 75 new aircraft to Chinese airlines in 2008, requiring its delivery team in Toulouse, the European company's headquarters, to deliver at least one aircraft each week to Chinese carriers, Barron says.
Driven by double-digit economic growth, China will need 100 to 150 aircraft each year in the next 20 years, according to Airbus forecasts.
Airbus last year delivered 67 aircraft to China. It plans to deliver 90 in 2009 and more than 100 in 2010.
To meet historic demand, the European consortium has been busy expanding its production capacity. It now produces about 34 A320 family jets a month and aims to increase that number to 40 a month next year. Boeing reportedly plans to make 480 to 490 aircraft this year and 500 to 525 planes in 2009, up from 441 last year.
The A320 final assembly line in Tianjin will help Airbus meet some of its demand. The factory, the first Airbus assembly line outside Europe, will start assembly of the first jet in August and deliver the first plane in June 2009. It will be able to roll out four jets a month by the end of 2011.
Barron has been leading Airbus China for four years, during which time it picked up speed in forging industrial cooperation with the Chinese aviation manufacturing industry.
Airbus purchased less than $20 million in aircraft components yearly from Chinese factories before 2004 and had only 23 percent of the Chinese fleet in service. But by the end of 2007, its subcontracting volume to China exceeded $70 million annually and it has grabbed 37 percent of the fleet in service.
"It was a collective decision that we had to make a big effort in not only the commercial area, but also in the industrial arena. We needed to substantially increase procurement from China and develop new ways we cooperate with Chinese industry," Barron recalls.
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